25-Jul-2009
THEN AND NOW—TENANTS IN FORECLOSED PROPERTIES, AND BUYERS OF FORECLOSED PROPERTIES

by Melissa Morris, attorney   Law regarding real estate has been changing so quickly that even attorneys have trouble keeping up with it. A law signed by President Obama on May 20, 2009, which took effect immediately, gives new protections to tenants who live in homes or apartments that are sold in foreclosure, and imposes new obligations on buyers of foreclosed properties.   Before May 20, a tenant had no protection if the property he was renting was sold in foreclosure. The tenant may have had no idea the rental property was even in a foreclosure action until he or she received a notice to vacate.   It didn’t matter whether or not the tenant had a lease or was paying the rent on time. Once the foreclosure sale was final, the tenant could be evicted.   The new law, called the Protecting Tenants at Foreclosure Act of 2009 guarantees all tenants at least 90 days warning before they have to leave their rental property.   Some other provisions are:   -The rent amount has to be reasonably close to the fair market rental value.   (For instance, a student renting from his parents for a fraction of the true rental value is not protected.) – If the tenant has a lease, rather than a month to month tenancy, the tenant has a right to remain in the unit and cannot be evicted, except for actions that constitute good cause (unless the new buyer actually plans to live in the property as his/her primary residence). -If the new owner does intend to reside in the property, the new owner must still provide at least a 90 day notice. – If the lease ends in less than 90 days, the new owner may not evict the tenant without giving the tenant at a minimum 90 days notice. – At the end of the term of the lease, the new owner may terminate the tenancy if the new owner has provided a 90-day notice.
These provisions expire on December 31, 2012.