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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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

  • I work at home and currently have Joint 50/50 decision-making and parenting time. If I continue to exercise my first right of refusal while the other party is working would that be helpful when going back to court post-decree to help get more time with the children?

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  • On 12/30, I entered into a lease in which it was discussed, agreed to, and I signed the addendum added regarding having a satellite dish on the property. It states that in compliance with FEDERAL Communication Commission, I had that right. On 1/3, Rey C of Satellite compny came out to help me exercise my right and was told by management that he couldn't install my dish, because they are issuing a notice to all residents that they need to have dishes removed. I was assessed fees for early termination of $360, and move in fee of $199. This blatantly a breach of contract, and violates federal law. Help
  • My neighbor is building a porch onto his house, of which his house is already close to the property line, and having the additional balcony he will be close to the fence. He said he'll have someone to come look at it so it is 'up to code' (he is aware it has to be so far away from the property line/fence). Is there any way we can get ahold of the inspection results? Or can we petition to have him stop building the porch? He will be so close to (and a good amount above) the fence, that they will see more of our yard than his own.
  • Is there an occupancy limit to the number of people who can live in a one bedroom duplex or a one bedroom apartment?
  • HOA is trying to garnish rent from tenants for back HOA dues. Is this legal since there is no relationship between the HOA and the tenants?
  • new owners have taken over my appartment housing, I wanna kno what I can do, they say may bathtub is not clean enough, wanted me to clean the light switches with a tooth brush, and say the apartment, per policy must look like new at all times
  • Im on HUD housing and the city of tucson dont aloud me to have cameras installed do two cars breaking in tires getting popped and Slash I've even had people backing in my backyard I had a few attempted break-ins and still they will not let me install cameras
  • My ex and I bought a house in Feb 2018 and after he cheated on me we broke up. The title is in both of our names so I know he has just as much as a right as I do for the house. However, I am living there until we make a decision on how we will be handling the house. On 9/27 he came in and took appliances out of the home. Is this legal? I was lead to believe that the appliances could not be removed or sold by either parties.
  • The tenants next door to me Have moved seven additional people into the house for a total number of six adults and six children living in a three bedroom home. Are three occupancy limitations?
  • Is there a time of year a landlord has to turn on the air conditioning

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Documents

.pdf  AzMortgageResource.gov ReadSpeaker

.pdf  AZ Renters Guide ReadSpeaker

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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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