Dennis Norman
By: Dennis Norman
One of the issues that has come to the surface over the past few months has been the effect on tenants when a home they are leasing is foreclosed upon. In many instances the tenants are unaware of the financial trouble of the seller and sometimes their first indication of a problem is when they are being told the vacate the property after the foreclosure.
Congress recently addressed this problem as part of the “Helping Families Save Their Homes Act of 2009″ which went into effect as law on May 20, 2009, provides for the following:
- For the act to apply the tenant must be under a “Bona Fide Lease or Tenancy” which the act describes as:
- the tenant is not the mortgagor or the child, spouse or parent of the mortgagor
- the lease or tenancy was the result of an arms-length transaction, and
- the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State or local subsidy
- tenancy or lease was in effect as of the date of the “notice” of foreclosure
- If the tenant meets the above requirements then the following apply:
- if tenant has a lease, tenant shall be permitted to occupy the premises until the end of the remaining term of the lease, unless the purchaser intends to occupy the property or unit as their primary residence in which case tenants occupancy cannot be terminated until 90 days after receiving notice to vacate
- if tenant does not have a lease or if the lease is terminable at will under State law, then tenant shall be given not less than 90 days after receipt of notice to vacate.
Agents should be aware of this law,particularly REO agents that may, as part of their service to the lender, assist with gaining possession of the property.
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