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IMPORTANT PLEASE READ: The Federal Law, Protecting Tenants at Foreclosure Act, expired and is no longer valid as of December 31, 2014.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

  • My grandson lives in the back of my property. His friend leaves there drunk sometimes. If he gets into an accident am i liable
  • Re: an increase in monthly maintenance fees in a housing CO-OP (not apt, not condo). QUESTION: Is there a percentage maximum that the monthly fees may be raised? Our by-laws say it is 20% without resident/member/owner approval, but some owner-members say it is only 5% by AZ law. (That sounds like tenant/landlord law which shouldn't apply.) Thanks for the help.
  • I have two roommates I no longer want in the private mobile home I am purchasing from owner how do I get them to move
  • I live in a townhouse with neighbors that are renters and the landlord resides in Rhode Island. I have issues with the tenants and have addressed with the landlord who does not address and has left a strained relations between both of us. I have asked the HOA for assistance but not sure if they will or can. What are my options to resolve?
  • I signed a contract to move into an apartment 6 weeks ago paid all fees and first months rent, I am supposed to move in on June 22, 2019. I received a phone call today telling me the apartment will no be available because the current renter has decided not to move. I have less than two weeks to find alternative housing is this legal?
  • If house is foreclosed on, what does the new owner need to provide to the old owner and how long does the the old owner have to get out by law?
  • i live in an senior apt complex. My neighbor died next door to me it was the end of the month the apt manager when the kids came to move the furniture out was given paperwork stating they now owed next month rent and charges which totaled 1200 the rent was 565.00. The manager presented it in a hostile manner. The kids didnt have the money to bury their parent let alone pay this bill and the reason for the bill in the first place? Because a proper 30 day notice wasnt given. How the hell are you suppose to give a notice when you have dropped dead literally. Is that legal?
  • 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 landlord has known about the rats in the attic many he never does anything about it the pipes in the bathroom make a big noise after flushing the toilet and I’m wondering what rights I have I’m disabled and feel like he thinks no one can do anything to him
  • I live in a building that supposed to be subsidized based on your income now they’re charging me 50% of their income for 50% is $24,000 a year I don’t make $24,000 a year can they legally do this and if not how do I go about filing a complaint because I’m looking at our buildings income guidelines and for them to charge me 24 I’m sorry 50% of rent monthly you have to meet $24,000 a year I don’t make that yearly can they legally do this and if not then what do I need to do about this

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.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

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