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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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

  • i called for an after hours air conditioning issue month ago and tech found no problem even tho i couldnt get unit to come overnight i am a renter property manager wants me to pay the bill
  • girlfriend tenant moved out. took without a written agreement items such as washer and driver ( I am paying on) and sectional sofa (gift from my sister) that I had and were in home before she moved in. police report filed but told nothing to be done but court?
  • What is the best route to take with my landlord? There is a dead mouse deep in the stove/oven. I cannot use it and my house smells bad from it. The landlord says I have to pay him $50 to replace it as it is for my use.
  • If I pay 1100 of the 1200 for one months rent and I'll pay th other 100 in two weeks can I be evicted
  • If a tenant only gives one week notice of early termination of the lease, is the landlord obligated to give back the full security deposit? It is stated in the lease that Any notice to terminate this tenancy must comply with the applicable legislation of the State of Arizona."
  • I am renting a unit and am under section 8... I just found out that I had bed bugs... I called my management and told them about it. They said that I had to pay for the pest control people to come out and spray .. I also found out that one of the other units had bed bugs less then a year ago.. shouldn't they have to pay or have someone check all the other units???
  • I wanted to know if a landlord can charge me for a damaged wood gate in the backyard? Can it be taken out of my deposit? The gate was never maintenance and it was not on the lease?
  • Can a landlord lawfully send you a 30 day notice to vacate in a form of a text message instead of a written notice as called for in the lease agreement? is this legal?
  • I bought a small summer place in an all 55+ rv park. I just found out if your unit is 30 yrs old the owner of the park must inspect your unit before you can put it up for sale. If they don't approve the condition of the unit you can't sell. Is this legal? Why would I not be informed before I bought?
  • I live in a RV park and the landlords have constantly shut off water without notice sometimes for days and have came on to my lot without notice and been rude and complaining that I complain too much and to go buy my own water. I have stage 4 cancer and am being bullied and denied basic water for showering cleaning cooking using my restroom the list keeps going what can I do?

STORIES

LegalLEARN

FIND LEGAL HELP

  • Please select your county of residence below.

    County:
     

OTHER LEGAL RESOURCES

  • State Bar of Arizona
    www.azbar.org
  • Maricopa County Bar
    www.maricopabar.org
    Referral number 602-257-4434
  • Pima County Bar
    www.pimacountybar.org
    Referral number 520-623-4625
  • National Domestic Violence Hotline
    800-799-7233
  • Bankruptcy Court Self Help Center
    866-553-0893
  • Certified Legal Document Preparer Program
    Link

ORGANIZATIONS

Documents

.pdf  Return Security Deposit Request ReadSpeaker

.pdf  Move-Out Inspection Request ReadSpeaker

.pdf  Request for Repairs ReadSpeaker

.pdf  Request for Repairs - Health and Safety ReadSpeaker

RELATED ARTICLES

Arizona Residential Landlord and Tenant Act

Security Deposits

Small Claims Court Process

The Landlord Tenant Relationship

Where to Find an Attorney for Specific Legal Advice

Frequently Asked Questions about Mediation

Tenant Self-Help Repairs

LINKS

The Arizona Residential Landlord and Tenant Act

Arizona Housing Information

HUD in Arizona

Public Access Case Lookup - Arizona Supreme Court

Maricopa County Judicial Branch

See More...

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