We have recently learned of a relatively new Federal law which gives some protection to tenants who reside in homes owned by folks who don’t pay the mortgage resulting in foreclosure UNTIL December 31, 2012. Below is a summary published on the Federal Deposit Insurance Corporation (FDIC) website:
Under the Protecting Tenants at Foreclosure Act:
- All tenants must receive a 90-day notice before being evicted as the result of a foreclosure.
- With some exceptions, the law requires that in the event of foreclosure, existing leases for renters are honored to the end of the term of their lease.
- The stated exceptions are for tenants without a lease, tenants with a lease terminable at will under state law, or where the owner acquiring the property will occupy it as a primary residence. In these cases, the tenants must receive a minimum of 90 days notice to vacate the property.
- This law does not affect the requirements of any state or local law that provides longer time periods or other additional protections for tenants.
- The new law does not require any agency to issue implementing regulations; these protections apply to foreclosures after May 20, 2009.
- FDIC examiners will monitor and enforce compliance with the requirements of this law in the same manner as other consumer protection laws and regulations.
TITLE VII—PROTECTING TENANTS AT
SEC. 701. SHORT TITLE.
This title may be cited as the ‘‘Protecting Tenants at Foreclosure
Act of 2009’’.
SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.
(a) IN GENERAL.—In the case of any foreclosure on a federally related mortgage loan or on any dwelling or residential real property
with PUBLIC LAWS
PUBLIC LAW 111–22—MAY 20, 2009 123 STAT. 1661
after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to—
(1) the provision, by such successor in interest of a notice
to vacate to any bona fide tenant at least 90 days before
the effective date of such notice; and
(2) the rights of any bona fide tenant, as of the date
of such notice of foreclosure—
(A) under any bona fide lease entered into before the
notice of foreclosure to occupy the premises until the end
of the remaining term of the lease, except that a successor
in interest may terminate a lease effective on the date
of sale of the unit to a purchaser who will occupy the
unit as a primary residence, subject to the receipt by the
tenant of the 90 day notice under paragraph (1); or
(B) without a lease or with a lease terminable at will
under State law, subject to the receipt by the tenant of
the 90 day notice under subsection (1),
except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time
periods or other additional protections for tenants.
(b) BONA FIDE LEASE OR TENANCY.—For purposes of this section,
a lease or tenancy shall be considered bona fide only if—
(1) the mortgagor or the child, spouse, or parent of the
mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length
(3) the lease or tenancy requires the receipt of rent that
is not substantially less than fair market rent for the property
or the unit’s rent is reduced or subsidized due to a Federal,
State, or local subsidy.
(c) DEFINITION.—For purposes of this section, the term ‘‘federally-related mortgage loan’’ has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
SEC. 703. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.
Section 8(o)(7) of the United States Housing Act of 1937 (42
U.S.C. 1437f(o)(7)) is amended—
(1) by inserting before the semicolon in subparagraph (C)
the following: ‘‘and in the case of an owner who is an immediate
successor in interest pursuant to foreclosure during the term
of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner—
‘‘(i) will occupy the unit as a primary residence;
‘‘(ii) has provided the tenant a notice to vacate
at least 90 days before the effective date of such
(2) by inserting at the end of subparagraph (F) the following:
‘‘In the case of any foreclosure on any federally-related
mortgage loan (as that term is defined in section 3 of the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of
123 STAT. 1662 PUBLIC LAW 111–22—MAY 20, 2009
assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law that provides longer time periods or other additional protections for tenants.’’.
SEC. 704. SUNSET.
This title, and any amendments made by this title are repealed,
and the requirements under this title shall terminate, on December 31, 2012..