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What are my tenants rights when the landlord is foreclosing?? Do I still have to pay rent?

Have you found yourself in this situation? Well now we have answers!

Congress Enacts Unprecedented Federal Tenant Protections On May 20, 2009, President Obama signed Senate Bill 896 (Helping Families Save Their Homes Act of 2009) into law. Title VII of this Act is called “Protecting Tenants at Foreclosure Act of 2009” (“PTFA”) and is designed to protect “bona-fide” tenants from being displaced when their landlord’s property is foreclosed. While the new law protects tenants, it raises significant issues for landlords, property managers, lending institutions and buyers. The PFTA applies where foreclosure has occurred on a “federally-related” home loan. A winning bidder at the foreclosure sale, often the bank, is termed by the PFTA as the “immediate successor in interest.” Pursuant to the PFTA, immediate successors in interest acquire the property subject to any “bona-fide” leases in place at the time of foreclosure. To qualify as “bona-fide,” (1) the lease must have been executed prior to the issuance of the notice of the foreclosure; (2) the defaulting borrower may not be the tenant under the lease; (3) the lease must be the result of an arms-length transaction; and (4) the lease must require “fair market rent” for the property. If a “bona-fide” lease exists, the successor in interest is required to honor the balance of the lease term unless the successor in interest sells the property to a buyer “who will occupy the unit as a primary residence.”  Additionally, the successor in interest is required to provide the tenant with 90-days notice to vacate.  Even in the case of “bona-fide” month-to-month tenancies, a successor in interest must still provide 90-days notice requiring the tenant to vacate. 

Significant concerns are raised by the PFTA and, in many instances, clear answers are yet to be determined. Property managers, landlords, agents and prospective buyers should familiarize themselves with the new law, and consult competent legal counsel if necessary. 
S.896Helping Families Save Their Homes Act of 2009 (Engrossed as Agreed to or Passed by Senate)

TITLE VII--PROTECTING TENANTS AT FORECLOSURE ACTSEC. 701. SHORT TITLE.This title may be cited as the `Protecting Tenants at Foreclosure Act of 2009'.SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.(a) In General- In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to--(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure--(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or(B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1),except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.(b) Bona Fide Lease or Tenancy- For purposes of this section, a lease or tenancy shall be considered bona fide only if--(1) the mortgagor under the contract is not the tenant;(2) the lease or tenancy was the result of an arms-length transaction; or(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property.(c) Definition- For purposes of this section, the term `federally-related mortgage loan' has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602). 

 

Published Tuesday, July 14, 2009 8:44 PM by Evan Carr

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About Evan Carr

Buy a Foreclosure in Arizona Bank owned/ Foreclosure transactions can present a bewildering array of financial, legal, and emotional decisions. That's where we come in! Through our strong relationship with over 25 bank owned home asset managers, we have gained extensive market knowledge and experience in handling these transactions. You have a great advantage having us on your side given our extensive professionalism and communication directly with asset managers. As the saying goes “It is always best to get it straight from the horse’s mouth” We can ensure a smooth and most of all enjoyable process for you-from helping you find just the right home to negotiating the right price, to insuring a smooth closing. Your John Hall and Associates Foreclosure professional is a great resource. He or she knows the local area, including home values, taxes, utility costs, and school data. Your agent will help to familiarize you with the processes involved in buying a foreclosure, alert you to potential risks, help you determine how much house you can afford, explain alternative financing strategies, as well as serving as your advocate during the negotiating process. As your single point of contact, your John Hall professional can manage the entire transaction, including coordinating inspections, keeping in touch with the bank, managing the documentation for the loan process, monitoring deadlines associated with contingencies, providing applicable paperwork, estimating closing costs, and helping prepare for a smooth and pleasant closing. Do you feel overwhelmed just reading all of that? Let us take care of it all; all you need to focus on is picking out paint colors for your new home! Don’t miss out on this market! Always remember “Only the wisest and the stupidest of men never allow change, fate leads the willing, and drags along the reluctant.” Start your search with a Foreclosure specialist today! Call, text, or email today! 602-357-0030 Email: info@evancarr.com Arizona bank owned homes, Arizona foreclosure, Arizona HUD homes, Find Arizona Foreclosures for sale, Search all Arizona foreclosures, Free Arizona foreclosure list, Find Phoenix foreclosures, Phoenix Real Estate, Arizona Relocation, AZ Bank Auction homes META TAGS Descriptions Arizona bank owned homes, Arizona foreclosure, Arizona HUD homes, Find Arizona Foreclosures for sale, Search all Arizona foreclosures, Free Arizona foreclosure list, Find Phoenix foreclosures, Phoenix Real Estate, Arizona Relocation, AZ Bank Auction homes Meta Tag Keywords Scottsdale AZ foreclosures, Scottsdale AZ real estate, Scottsdale AZ foreclosure search, Scottsdale bank owned homes, Scottsdale free foreclosure list, Scottsdale condos, Scottsdale Apartments, Scottsdale bank auctions, Foreclosures in Scottsdale, Scottsdale Foreclosures Peoria AZ Foreclosures, Scottsdale AZ Foreclosures, Tempe AZ Foreclosures, Mesa Foreclosures, Glendale Foreclosures, Avondale Foreclosures, Chandler AZ Foreclosures, Gilbert Foreclosures, Ahwatukee Foreclosures HUD Homes, FHA Loans, VA Loans, Tax Credit, Down Payment Assistance, Government Grant Program, Maricopa County Grant Program, First-Time Home Buyers Loan,Countrywide foreclosures, Countrywide Bank Owned

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