General Housing Information Article


WHAT IF I RENT A HOUSE THAT'S IN FORECLOSURE - The Protecting Tenants at Foreclosure Act

 The Protecting Tenants at Foreclosure Act

This law expired on December 31, 2014

 

IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014. While there were some attempts in the House to revive this law in 2015 none have been successful. Arizona State Law, A.R.S § 33-1331, gives tenants of foreclosed properties some limited protections; information about these protections can be found in this article. This article remains on AZLawHelp.org purely for historical value for those interested in how the Protecting Tenants at Foreclosure Act operated from 2009 through 2014.

There are legal protections for tenants renting a house that is in or goes into foreclosure. The Protecting Tenants at Foreclosure Act (PTFA) was passed by Congress signed into law by the President Obama in 2009; subsequently the law was extended in 2010. The PTFA expired on December 31, 2014. The PTFA, depending on the facts in a particular situation, requires that renters in foreclosed homes be allowed to stay or given sufficient notice under the law.

  

Who qualifies for protection under the PTFA?

The tenant protection provisions apply in the case of any foreclosure on a “federally related mortgage loan” or on any dwelling or residential real property. The tenant must also be “bona fide.” 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; and

  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.

In other words the lease must be made with another person and not with oneself and the rent payments must be a fair amount for the property that is not supplemented by the government.

  

When do renters in foreclosed homes get to stay and when do they have to leave?

Renters Get to Stay IF:

Renters get to stay for the duration of the lease, if all of the following requirements are met:

  1. There is a valid lease (not the end of the lease term),

  2. The lease was signed before receiving notice of foreclosure (whether judicial foreclosure or trustee sale), and

  3. The new owner does not intend to occupy the property as a primary residence.

Renters Cannot Stay But Must Be Given Notice IF:

In most other situations, the renters will have to leave, once the foreclosure is complete, and upon receiving 90 days notice from the new owner. The common situations where a renter will have to vacate after the foreclosure upon receiving notice are:

  • Renters must vacate if there is a valid lease and they had notice of foreclosure before signing the lease; or

  • Renters must vacate if there is a valid lease, and even if there was no notice of foreclosure but the new owner intends to occupy the property as a primary residence; or

  • Renters must vacate if there is no valid lease, including where a lease expires and the renter is paying month-to-month. 

Why does the law end December 31, 2014?

The law has what is called a sunset provision, meaning it has an expiration date. The original date was extended in the “Dodd-Frank Wall Street Reform and Consumer Protection Act”, so that the law will be repealed on December 31. 2014. When laws are written, the legislative body writing the law may set a date of when that law will end, referred to as a “sunset” clause or provision (Note: Not all laws have sunset provisions, it is not required). The PTFA is a federal law, Congress would have to authorize and extension or make the law permanent and the President would have to sign it into law.

 

 

Source:  See 12 U.S.C. 5220 or search the US Code online with the US House of Representatives website. For additional information see the Consumer Financial Protection Bureau website.


Comments:

QUESTIONS

  • I am currently in the midst of a civil dispute with the co-buyer of a house I recently purchased back in April of 2015. I have been removed from the house temporarily with an order of protection which I am currently in the process of contesting. The co-buyer is demanding I remove my name from the title. I currently have an indemnity agreement that was signed by the co-buyer, but it doesnt protect me from the mortgage company, only the co-buyer. How can I force a Judicial Sale of the house so that hes forced to refinance and take my name off the mortgage? That or the house goes to the highest
  • Is there a time of year a landlord has to turn on the air conditioning
  • I recently entered in to a lease with myself, my long time girlfriend, and her friend. We used my credit to qualify because neither of them has credit. The friend and I put most of the money down for the deposits and all utilities are in my name. Less than a month after we made the move, my girlfriend terminated our relationship. The two of them expect me to go on living there with them until the end of the lease. I am not ok with that. Is there is any way I can force them to find someone to sign in place of me on the lease and refund my deposit money so I can move out? They refuse to go
  • I moved into an apartment 4 years ago with carpet flooring. I have always been allergic to carpet. Now I want the complex to change the carpet to vinyl flooring planks. Are they required do to ADA and pay for it? They say if I want new flooring, I must pay for it.
  • Is it illegal for in-laws to throw mine and my husbands stuff away or give it away without permission. Even tho we live in there home
  • Me and my boyfriend have been living in an RV for the past year-and-a-half or so it's in his name and his ex-wife's name well everything is okay until he gets mad at me and wants me to leave and tries to kick me out when I'm here all the time and he's a truck driver it's only when he gets mad he tries to kick me out is there any type of law here in Texas that can prevent him from kicking me out
  • We have been complaining about roach problem for 6 months. We had pest control come and sprayed again and again to no avail. We pay rent but living in roach infested apartment with our kids is becoming nuisance since they are everywhere. What can we do? They are sending another pest control person in few days. Help
  • Where would I look for assistance when the local HOA does not enforce the CC&Rs, and permit other homeowners to be placed in a hazardous envioronment?
  • Per my lease agreement I sent notice to my landlord that I wanted to renew the lease a month prior to lease ending via email 6/28/19, the same day he sent me notice of rent increase which was received on 6/29/19. He recently replied that we are on a month to month, our lease does not end until July 31st at 5pm. He took over two weeks to respond to email, I am unable to give him 30days notice as he took too long to respond, I recently emailed back accepting he rental amount if a lease is written. What right do I have? Last year when he raised the rent he back dated the 30 day notice.
  • Is there an ordinance that governs the use of residential lights that might disturb neighbors?

STORIES

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    www.pimacountybar.org
    Referral number 520-623-4625
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ORGANIZATIONS

Documents

.pdf  AzMortgageResource.gov ReadSpeaker

.pdf  AZ Renters Guide ReadSpeaker

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Where can I find legal help with a foreclosure?

Did you know the Arizona Attorney General’s Office has a wide range of statewide assistance programs funded through the national mortgage settlement that could benefit you or people you know?

Legal Tips for Tenants

LINKS

Low Income Home Energy Assistance Program (LIHEAP)

https://www.lawforseniors.org/
https://www.lawforveterans.org
https://lawforkids.org/
https://www.azcourthelp.org/