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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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 you end a lease early if the place you live is not safe? (gun shotting and domestic violence in the area) If you do end a lease early ..what is the fee there are allowed to charge you?
  • It states in my lease that the tenant, "In the event of 'the tenants' failure to give notice of 'the tenants' intention to terminate, 'the tenant' shall be liable for rent for another 30 day period. According to the apartment complex, this means that they can charge rent for an entire month after the lease expires. Is this truly legal?
  • Are landlords responsible for termites/ swarmers in apartment complex!? Lease states they cover “pest control but excluding “wood eating insects” and they are not responsible for any damage to my property because of them... !? That cant be legal. Its like living outside with all these flying termites.
  • We discovered we had a rat in our apartment, that same day we reported it to the office and they scheduled for an exterminator to set traps two days later. The next day we started seeing ticks around the apartment, we have one dog and started him on Nexguard tick preventative right away. The apartments are stating that they do not cover for tick exterminator because the ticks couldn't have traveled via the rat. Who is responsible for tick extermination?
  • Is it legal for my landlord to charge me to have her call a repairman out for health and safety related repairs? The heater stopped working and it is below freezing at night and she says she will call someone out after we pay her $75 to make the call.
  • I am renting (with 3 months left on my lease) but am in the process of purchasing a home. I have requested to vacate the rental property early but will pay all remaining rent. Question: can the landlord legally require me to maintain the rental property (thru the lease date) even after I’ve paid all rent and vacated the property?
  • The landlord says water is included in the rent. I have a two bed room and he has decided to increase the rent because I am getting a roommate to afford the initial increase he has already made. I have a two bed room apartment and have lived alone for a year, one of the bedrooms are empty and he wants to raise the rent stating that having two people living in a two bed room means more water use. Do I have any rights here? I was paying $600.00, he raised the rent to $750.00 because he is the NEW owner and says it is necessary. Now he says he will raise it again.
  • The drain gets clogged. Who pays for the repair when it’s the tenants Hair clogging the drain. Second time in 60 days
  • If I am moving out of home that I am renting and there are damages made on my behalf, Can I repair on my own before I move out or does the landlord have the right to do repairs themselves and charge me?
  • 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

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

HUD in Arizona

Public Access Case Lookup - Arizona Supreme Court

Maricopa County Judicial Branch

Maricopa County Judicial Branch Self-Service Center Online

See More...

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