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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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

  • Does Arizona have any laws about the landlord calling/texting days before rent is due and EARLY morning of the day it is due according to the lease they have been doing this since moving in any info is appreciated thank u
  • I am thinking about having a yard sale. I have a steep driveway. Am I liable if a person falls due only to the steepness of the driveway? What if I put up a sign to enter at own risk?
  • I have lived with a lady for 16 years as man and wife but we are not married. I have took care of her farm and repairs ,and now she wants me to move ,legally do I have to move or do I have any legal rights to live on her farm?
  • 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
  • can 3 adults and 2 small kids live in a 1 bedroom apt.?
  • My girlfriend and I have a lease on a house until June 2020. Things have broken down with us. She wants to move out and stick me with the lease. We are both signers on the lease and they used both our credit and income to get the house. We have been here since 2016. And re-upped a 2 year lease June of last year. I do not want to move, BUT I do not want to get stuck paying the entire $1700/mo. Please let me know what I can do not to get screwed over by her.
  • I was running late to trial and sent an email along with a call to judges chambers. An automated email provided a number to contact as they were out of the office. So I called there was no answer so I left a message. I was going theu security around 940 am. And hit the court room floor about 943, 944am, court was scheduled for 930am. As I was approching I seen the opposing party walking out , the bailiff locking the door behind them. Extremely rude, as the first time we met, she replied, to questions I asked, "get a lawyer, you will get some thing in the mail. I can file an appeal right?
  • 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?
  • We have been complaining about roach problem for 6 months. We had pest control come and sprayed again and again to no avail. We pay rent but living in roach infested apartment with our kids is becoming nuisance since they are everywhere. What can we do? They are sending another pest control person in few days. Help
  • i have a 2 bedroom 2 bath apartment i live here with my 3 children (14,14,4) a friend of my just lost her home and is temporarily staying with us its her and her significant other... My ex keeps sending messages about too many in my home so my QUESTION is : is 3 adults and 3 kids illegal??

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.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?

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