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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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

  • Can a landlord install cameras outside the house I'm renting
  • I currently live in an apartment. The complex charges for the general water sewer and trash but they also charge for a trash service separate from the az trash fee and it is not optional according to the leasing office. Are they allowed to do this or would this type of service have to be considered and option for residents to want to do? Is it illegal to charge for 2 trash services?
  • My wife and I moved into a rental home on 3/1/18 in Tucson, Arizona, and almost immediately my wife and I started having breathing problems when inside the house. We do not experience any of this when outside the house. Upon my inspection, I noticed black mold inside and out of the guest bathroom toilet. The management company sent their maintenance person who after getting clearance (1 week) they removed and replaced the toilet. The odor was abated for approximately 2 days and returned with the entire inside of the house smelling musty. It is more pungent in the laundry room and master bathroom. I have found mold in the master bathroom toilet on the inside. I went to the Management Company on 3/22/18 to advise them we continue to find mold in the house and my wife and myself are having breathing problems, mucus and headaches when we are in the home. We are having no issues when we are not inside the home and outside at work or living our active life style. and to see if they would look into this and was advised it was on me and I should hire a mold technician check it out. If mold is found then the Management company would move on it. Why would I have to have this expense, it’s not my house, we just moved in and I feel this is the landlords responsibility. Can you please advise if there is any action I might take that would not cost a large amount of money to get the management company to do their job and do due diligence on this issue. Also, if you know of any agency in Tucson that controls these types of issues between Tenants and their landlords/Management Companies please let me know. Thank you.
  • How long a landlord has to fix a not cooling A/C?
  • We re moving out of our rented home and disagreeing with our landlord over wether or not some of the non permanent add ons are "his". A flagpole and pond, both can be removed with virtually no effort, so therefore are not permanent fixtures right? Any help with this would be great, Thanks so much
  • We are on a month to month lease with 60 notice to vacate. We are actually vacating after 30 days, leaving the house empty (but open to potential new tenants) for the remainder of the terms. Who is responsible for the utilities during that time? I don't want someone to leave a light on and be charged for it after we have turned the property back over the the management company.
  • We rented from a complex in Phoenix with a 13 month lease. We gave a 30 day notice and broke our lease after 6 months for my wife to take a job in PA. The lease states that we are responsible for the entire amount due UNTIL the apt is rented. That amounts to $11,000! It is now in collections, so I called to see if the apt. has been rented yet. I was not told if it has been, but the mgr. said it does not matter because we are still responsible for ALL of the rent, since we did not pay it all when we moved out. . Can they charge us for rent on an apt that is being rented? If so--RIDICULOUS
  • Mtg of my apt complex wrote my contract for 5 month but noted it is a 6 mo contract. It was to be a 6 month contract not 5. what shall I do? Noted in the contract says I have to give a 30 day notice to vacate which would have been the end of Jan.
  • My landlord comes to my house unannounced very often.  Since January he has been here every day.  He brings his son and they work on cars in the backyard from morning until eleven o'clock at night sometimes.  The lease says he has access to the shed.  My landlord says that because the lease says he has access to the shed, he is justified.  He also enters my house when nobody is home/  What should I do?
  • My landlord did not require a deposit and is now sending a bill for cleaning of the apartment. I am under the impression that cleaning is something the landlord must do and therefore a cost of doing business.

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