The Protecting Tenants at Foreclosure Act protects tenants from immediate eviction because of foreclosure on the properties they occupy. This law was enacted on the Federal level because state laws vary so greatly that tenants under state laws are subject to a huge variety of consequences when a landlord’s property goes into foreclosure. The tenant rights in foreclosure provisions apply in the case of any foreclosure on a “federally related mortgage loan” or on any dwelling or residential real property.
This act provides that “any immediate successor in interest” in such a foreclosed property, including a bank that takes title to a house upon foreclosure, will assume the interest subject to the rights of any bona fide tenant and will need to comply with certain notice requirements that are protecting tenants at foreclosure.
Renters rights foreclosure information under the Protecting Tenants at Foreclosure Act includes a provision that states the immediate successor in interest of a dwelling or residential real property must provide tenants with a notice to vacate at least 90 days before the effective date in such notice.
The date of a notice of foreclosure under the protecting tenants at foreclosure act is defined as the date on which complete title to a property is transferred to a successor entity or a person as a result of a court order or pursuant to provisions in a mortgage, deed of trust, or security deed.
Tenants also must be permitted to stay in the residence until the end of their leases, with two exceptions:
1: When the property is sold after foreclosure to a purchaser who will occupy the property as a primary residence or,
2: When there is no lease or the lease is terminable at will under state law.
However, even when these exceptions apply, tenants must still receive 90 days notice before they may be evicted. The protections of this law apply to tenants under a “bona fide” lease or tenancy. A lease or tenancy is “bona fide” only if:
1: The mortgagor or a child, spouse, or parent of the mortgagor under the contract is not the tenant;
2: The lease or tenancy was the product of an arm’s-length transaction;
3: The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent or the rent is reduced or subsidized due to a federal, state, or local subsidy.
As you can see, the provisions of this act pertain to tenants rights in foreclosure. If, as a landlord, you are faced with foreclosure, you should immediately obtain the advice of an attorney. You should be able, under the provisions of the Protecting Tenants at Foreclosure Act, to advise your tenants that they have 90 days to vacate the premises if they cannot obtain a new lease from the new owners.
Although the landlord is not required legally to advise their tenants of the rights and protections afforded by the Protecting Tenants at Foreclosure Act, the tenant, through no fault of their own, has to bear the expenses of moving. This can be a real burden for some tenants. Always check with an attorney to see what your legal responsibilities under the Protecting Tenants at Foreclosure Act are insofar as protecting tenants at foreclosure.
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