On May 20, 2009 President Obama signed the Helping Families Save Their Homes Act of 2009, which addresses several issues affecting the housing industry. Title VII of the act, entitled Protecting Tenants at Foreclosure Act of 2009 addresses how tenancy will be handled during foreclosure. The Act will remain in effect until December 31, 2012.
Prior to this legislation being passed, tenants had little or no recourse during a foreclosure. Many tenants learned of their landlord's foreclosure when the local sheriff showed up on their doorstep with eviction notice in hand. While some lenders made provisions for tenants occupying foreclosures, no provisions were legally enforceable.
How the Protecting Tenants at Foreclosure Act of 2009 works:
If the tenant has a written lease, the Foreclosure Owner takes title subject to the lease, and the tenant must be allowed to stay in the property until the end of the lease term (in accordance with the lease terms).
However, if the Foreclosure Owner sells the property to a buyer who will “occupy the unit as a primary residence”, the Foreclosure Owner may terminate the lease effective on the date of sale (i.e., closing) provided the tenant is given 90 days notice to vacate. This 90 day notice to vacate can not be given until there is a fully executed contract with a buyer who will occupy the Property as a primary residence. If the contract is scheduled to close before the 90 day notice period expires, the contract may close but the buyer becomes the landlord and can not take possession until the 90 day period has expired.
If the tenant does not have a lease or the lease is terminable at will under State law (i.e., a tenancy at will), the tenant must be given 90 days notice to vacate (note that this may require the Foreclosure Owner to give more notice than would otherwise be required under other laws).
Notice to the tenant does not have to be in writing, nor does it need to be sent via Certified Mail. However, it is strongly suggested that notice be given in writing to satisfy the burden of proof that notice was given should there be a disagreement between the tenant and foreclosure owner.
The terms of the lease remain the same with the exeption of where rent monies are to be paid. In most cases, this will be the foreclosure owner. Official notices must also be sent to the new title holder.
For more detailed information on how the new legislation effects you, contact your local REALTOR.
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Bria Toulemonde, CDPE
South Beach Investments Realty
305.851.5910
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