February 19, 2012
Federal law offers renters more protection from eviction if their landlord loses the property through foreclosure. The law has some fuzzy requirements, but should be a boon to renters who otherwise might have been evicted with little or no notice.The law allows tenants who have a lease to remain in their home until the end of the lease period.
The fundamental purpose of the Protecting Tenants at Foreclosure Act is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing, if the renter signed the lease before the owner obtained the foreclosed loan. In that case, the lease will still "survive" the foreclosure. The law protects only a bona fide lease or tenancy, which is defined as a situation that meets three criteria:
The renter may not be the former owner of the home, or the former owner's spouse, child or parent.
The terms of the rental must be at arm's length between the landlord and renter.
The rent cannot be substantially less than the fair-market rent, unless the rent is subject to a government reduction or subsidy.
The bottom line is that landlords and renters have new rights and responsibilities in foreclosure situations. While renters may face challenges in their attempts to exercise those rights, knowledge and action can prevail.