Landlord and Tenant Rights and Responsibilities 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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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

  • My house foreclosed and was sold at auction on 4/4. On 4/5 I spoke with the new owner and he said he would give me until 4/12 to vacate. Today 4/9 I recieved a Forcible Detainer request form in the mail. DO I need to be out by today?
  • Ive complained about a car alarm that constantly goes off right outside my bedroom window and nothing is being done about it what can I do
  • No hot water in my apt bathroom shower for the last three months.
  • I have rented my home for 18 years and now my landlord has decided to sell the house..he gave us 60 days to find a place to live plus another two weeks but with rent so high its been hard to find another place to live especially for 7 people what can I do? Can I get more time ?
  • I signed a lease for 13 months. I was told there would be a cap of 60.00 for water. If I used less than that I paid for what I used. If I used 70.00 worth I would only pay 60.00. My water bill for 9 months has been approximately 15.00. I found out on 1/2/15 that I will be charged a standard amount of 80.00 a month because I have 2 bathrooms. Is this legal?
  • My question is I have lived with my boyfriend just shy of a year he was on the lease , I was not however we had an oral agreement that i was living with him along with my son last time and my dog, my mail went there and all my personal belongings where there well on 1/5/18 his parents came to my house changed the locks on me after I had left ( that same day cops showed up spoke with my boyfriend to verify he wanted me there he said yes ) later that night they changed the locks and had all my personal belongings moved to storage which I didn’t authorize , what are my rights and what should I do
  • I am the landlord and the toilet water line burst and flooded apartment. I am paying to have everything replaced and cleaned up but the tenant has to vacate for 2 days. Do I have to pay for a hotel for them to stay in?
  • We have a tenant who is operating a commercial business in a residential R5 area on our property. We do have liability insurance. It started out as a hobby, but it has gotten beyond that. Do we have any liability in this situation? What are our legal responsibilities? The property is actually in unincorporated Maricopa County.
  • A girl was staying with me for 2 months and I never drafted a lease, she threatened the domain of my home as far as personal property is concerned and was completely insubordinate whether it be cleanliness, punctuality so on and so forth. In the end I kicked her out. What legal right if any is in her favor? To my understanding she was never a legal tenant so I would think almost next to none.
  • I am on section 8, I rent from a real estate agency. I am being evicted for not paying my water bill. The realtor makes me share the water bill with my neighbor, and divides it in half for us to pay. I have not been able to pay for it, I have two daughters and we struggle to pay the electric and other expenses. In the past he has allowed me to get caught up when i file for taxes. I pay it out of the earned income credit refund, this year he is not allowing me to do so. They are evicting me, I asked if i could pay it when i get my tax refund, he said no. Is it legal to charge me half of H2o?

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