Uncategorized March 19, 2012

Foreclosure & Tenant’s rights.

That the federal law offering protection for tenants in foreclosed rentals has been extended?  The “Protecting Tenants at Foreclosure Act” (PTFA) was originally scheduled to expire on December 31, 2012, but the Dodd-Frank Act has extended it to December 31, 2014.

Per the act tenants with a “bona fide” lease that was entered into before the notice of foreclosure can remain in the foreclosed home until the end of the lease, unless the bank sells the property to someone who intends to make it his/her primary residence.  If the new owner intends to occupy the home, a 90-day notice is required, even if the tenant is on a month-to-month lease.

Per the PTFA, in a “bona fide” lease:

  • (1) the tenant cannot be the mortgagor or the child, spouse, or parent of the mortgagor;
  • (2) the lease or tenancy must be the result of an arms-length transaction; and
  • (3) the rent cannot be substantially less than fair market rent for the property unless the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy.