Protecting Tenants at Foreclosure It is now clear that the foreclosure crisis affects more than homeowners. As landlords have defaulted on their mortgages, renters in good standing have been evicted from properties in foreclosure with little or no notice. In fact, NLIHC research shows that renters make up as many as 40% of the households facing foreclosure. To address this problem and to stabilize neighborhoods, Congress passed and President Obama signed the Protecting Tenants at Foreclosure Act (PTFA), Public Law 111-22 (May 20, 2009),as extended and clarified by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (July 21, 2010) which went into effect on May 20, 2009. Generally, the Act requires anyone acquiring residential property through foreclosure to honor existing leases or provide tenants with a minimum 90-day notice to vacate prior to initiating an eviction action. PTFA provisions. Specifically, bona fide tenants with more than 90 days remaining on their leases may not be evicted until the end of their lease terms. In the case of leases with less than 90 days remaining, month-to-month leases, and leases terminable at will, a minimum of 90 days’ notice is required. The sole exception is when a new owner seeks to occupy the unit as a primary residence. If such new owner is a successor in interest (SII) or purchases from a SII, the new owner may terminate the lease with at least 90 days’ notice. A bona fide lease or tenancy is one in which the tenant is not the mortgagor or a member of the mortgagor’s family, the lease or tenancy is the result of an arm’s length transaction, and the lease or tenancy requires rent that is not substantially lower than fair market rent or is reduced or subsidized due to a federal, state or local subsidy. The PTFA is a national law that applies in every state and provides a minimum of protection in each state. If however, a state or local community provides more protections for tenants, then the more protective provisions will apply instead of the PTFA. The provisions of the PTFA expire at the end of 2014. Section 8 vouchers holders. Section 8 voucher tenants have additional protections. When there is a Section 8 tenancy, the owner who is an immediate successor in interest at foreclosure takes subject to the Section 8 voucher lease and the Section 8 Housing Assistance Payments (HAP) contract. During the term of the lease, vacating the property prior to sale does not constitute good cause for eviction, except the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner will occupy the unit as a primary residence; and has provided the tenant a notice to vacate at least 90 days before the effective date of such notice. The information on this website can be used to gain a greater understanding of the PTFA, state and local foreclosure and eviction laws, and the actions tenants and advocates need to take to protect those rights. The web Site address is: http://www.nlihc.org/template/page.cfm?id=260
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