Tenants of Foreclosed Properties Have Protection

Are you renting a house, that is about to be foreclosed on? There is help, at least to keep you in the house for a while (at least 90 days, to be exact, or if you have a lease, until the end of the lease under certain circumstances).

On May 20, 2009, President Obama signed into law The Protecting Tenants in Foreclosure Act. Public Law No.111-22. The law took effect immediately.

The principal protection of the law is that the successor in interest to the foreclosing lender must give a bona fide tenant (not the mortgagee or a family member who is paying market rate rent negotiated as part of an arms length transaction) at least 90 days notice to vacate the property.

If the tenant has a lease, they are entitled to occupy the property until the end of the lease. The new owner may terminate the lease on 90 days notice if the purchaser intends to occupy the property. In both cases, the tenant must pay the contract rent to the new owner or they may terminate the tenant’s occupancy in compliance with state law. [There are additional provisions relating to tenants (and owners) of section 8 properties.]
None of these provisions preempts state or local laws providing greater protection to tenants.
The provisions of this law expire December 31, 2012.