Written by attorney Rixon Charles Rafter III

The Protecting Tenants at Foreclosure Act- 90 Days Notice Required for Eviction

protects tenants from eviction because of foreclosure on the properties they occupy. These provisions expire on December 31, 2014.

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. They provide that “any immediate successor in interest" in such a foreclosed property, including a bank that takes title to a house upon foreclosure, will assume the interest subject to the rights of any bona fide tenant and will need to comply with certain notice requirements. Under this law, the immediate successor in interest of a dwelling or residential real property must provide tenants with a notice to vacate at least 90 days before the effective date of such notice. The date of a “notice of foreclosure" is defined as the date on which complete title to a property is transferred to a successor entity or a person as a result of a court order or pursuant to provisions in a mortgage, deed of trust, or security deed. Tenants also must be permitted to stay in the residence until the end of their leases, with two exceptions:

(1) When the property is sold after foreclosure to a purchaser who will occupy the property as a primary residence or, (2) When there is no lease or the lease is terminable at will under state law.

The law states that “federally related mortgage loan" has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 USC 2602). The definition includes any loan secured by a lien on one-to-four family residential real property, including individual units of condominiums and cooperatives. However, even when these exceptions apply, tenants must still receive 90 days’ notice before they may be evicted.

The protections of this law apply to tenants under a “bona fide" lease or tenancy. 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.

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