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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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

  • We own a ground floor condo. The condo above us is rented to some very noisy people, including loud repetitious boom-boom "music". Police have been here 4 times. What can we do? What proof is required to avoid the "he said, she said" problem? The boom-boom from morning to late night is making our home uninhabitable.
  • My hoa and I share a commom wall,the way I read the CC@R they are responsible for at least half the repair and 100% if by negligence. They have watered the wall instead of the landscaping and everywhere the water hit, the mortar has corrded. No that the wall is in need of repair they claim they are not responsible for the wall at all. What is the Arizona laws on common walls? and what recoarse do I have to get the wall repaired? There are at least 6 houses on my row that need repair.
  • I have an issue with my home owners association, they have locked me out of the access gate to the pool area that is close to my condo. Now I have to walk a considerable distance to another access to the pool. They have denied me a key, when I previously had a Kay before.
  • If a seller provides a counteroffer on a property, does the seller have to approve the offer in writing or in a new contract?
  • The CC&R states no clothesline. The home we are in was built in 1979. Is there a conflict with ARS 33-439 and ARS 44-1761? Can I legally put up a clothesline to dry clothes in my unfenced backyard?
  • We were invited to come and live in my niece and nephews Casita. We made plans for over 3 years. It was agreed we would come and work and save 35,000.00 and then buy a home. It was agreed that I would help clean their home and cook dinner. Shortly after we arrived my nieces husband started acting very strange. He decided he wanted us out after we left everything behind to start a new life. He is pressuring my niece to get us out. She says we can continue to stay until we get our house. Can he override what we all have agreed on?
  • pools are not being opended,the water is always green,leash law is not being enforced,poop is all over walk ways,stairways smell like urine and dead animals
  • I recently went to court and got my case kicked out for the reason i sent the 5 day notice via certified mail and didn't wait 10 days to file a forcible detainer?... i waited 7 days?. the judge said it is 5 days for serving it by hand but 10 if it is done certified mail? is this right? thanks
  • My landlord just have us 2 months notice to move by text message. Can my landlord due that during a time of state emergency?
  • Just moved out to AZ, my girlfriend and I have a house with a pool and a walled in back yard. She asked if it is legal to sunbathe without a swimsuit or any clothes on. I know there are public exposure laws, but does it make a difference that is in my own property and with an enclosed yard? Or if a neighbor looks over my wall and sees her and reports it, are we in the wrong?

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ORGANIZATIONS

Documents

.pdf  AzMortgageResource.gov ReadSpeaker

.pdf  AZ Renters Guide ReadSpeaker

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Where can I find legal help with a foreclosure?

Did you know the Arizona Attorney General’s Office has a wide range of statewide assistance programs funded through the national mortgage settlement that could benefit you or people you know?

Legal Tips for Tenants

LINKS

Low Income Home Energy Assistance Program (LIHEAP)

https://www.lawforseniors.org/
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