FORECLOSURE – Tenants Rights

FORECLOSURETenants Rights
 
Protections for tenants clarified
 
     The term notice of foreclosure has now been defined and the date of the notice of foreclosure clarified in the federal 2009 Protecting Tenants at Foreclosure Act (PTFA), which includes provisions that protect residential tenants when the property they are renting is foreclosed.
     For a tenant to receive these protections, a bona fide lease or tenancy, as defined by PTFA, must have been entered into before the date of the notice of foreclosure. What notice of foreclosure means was unclear under PTFA but has been clarified by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
     The Dodd-Frank Act now defines the date of notice of foreclosure as “the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed.”
     As a result, tenants are now presumably protected by PFTA as long as they entered into a bona fide lease or tenancy before the new title was issued.
     Under PTFA, the “immediate successor in interest” (usually the bank) is required to honor the terms of the lease unless it sells the property to a buyer who will occupy it as a primary residence. If the property is sold to such a buyer, the tenants are entitled to receive a 90 day notice to vacate. Tenants who have no lease or who have a tenancy without a definite termination date are also entitled to receive a 90-day notice to vacate.
     PTFA has been extended and is now set to expire on December 31, 2014.

(Article provided by Daphne Falgons, Real Estate Sales Professional)