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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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 AC HAS BEEN OUT FOR 3 DAYS, OFFICE IS NOT ANSWERING THE PHONE.
  • My landlord was intoxicated and assaulted me yesterday. I called the police and they came over, the cops asked if I wanted to press charges I said no, which I now regret. The officer asked if things would be ok if I left for the night and returned tomorrow. I stated yes and went to a motel for the night. When I returned home this afternoon he shows up with the police and a restraining order. I just paid him a months rent on July 1st, which he won't give back part off. Can I now press charges a day or two after and can I sue him for the rent I was screwed out of? He assaulted me... Help!!
  • I was assaulted twice by another tenant ,once in October 2017 and once in February 2018 after walking my dogs ,on a leash, and tenant's bulldog charged after my small dogs,she threatened and hit me on both occasions and pulled a gun on me in second assault...police say they are still investigating though a video shows she hit me and she admitted to striking me on first assault.Manager has do e nothing to this woman except for a warning and stating to me this woman says she is moving in the future. seeing how the second assault was foreseeable ,past assault, can complex be held liable
  • Our leasing company who operates nation wide told me their contractors are legally obligated to tell them if they see or hear pets. (We don’t have one but our neighbors does, these houses are squished together) now they are trying to force fees with out me signing anything. It feels like an invasion, one of these dates this has been “recorded” was today while I’m at work. We haven’t requested for anything to be fixed. Is this legally allowed?
  • We moved into a home in Nov. 2014. With a 2 year lease. The owner recently told us he is selling the house but that whoever buys it will have to honor the duration of the lease. Is this true?
  • My husband and I rented a very small 3 bed room house. Very basic but perfect for us. We’ve had some health issues so our adult grandson has been living with us for about a month. I contacted the owner. He’s raised our rent to 1100 a month. Homes for rent in this area are renting for 800.00 a month. This home was built in the early 70s and is very small under 1000 sq foot. Newer nicer homes are renting for 1100 a month. Much nicer and updated homes. We have never been late on rent and he has raised our rent every year but homes in this older but nice neighborhood are not near worth 1100 ???
  • If you moved into a property, but never sighned a lease agreement, can you be evicted?
  • We had a roommate. He started drinking heavily again while living here even though one of the agreements was that he didn't. He was late on rent, and after causing a lot of drama ended up getting arrested for DV within the house and is not allowed to return here without police escorts. We also have an Order of Protection against him. A lot of his stuff is still here at the house and we are trying to figure out how long we are obligated to keep it. This happened mid June and it has been over a month since the last time he came to get anything. Thanks in advance.
  • Does a roach problem qualify as uninhabitable? Is it the landlords responsibility to pay for pest control?
  • I have 4 months l on my 12 month apartment lease. I am getting married in 1 week. Can I break my lease early and receive my deposit back because of my change in marital status and moving into my new husbands home?

STORIES

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