Can a bank kick out the tenants when an investment property goes into foreclosure? I keep an eye on the “housing wanted” section on craigslist and I’m seeing more and more people getting kicked out of duplexes by the bank because their landlord ended up going to foreclosure. Is it common practice for the banks to just kick out the tenants, or do they give them a window for them to find a new place? or is it totally up to the lender as to what they want to do?
Public Law 111-22, Effective Date May 20, 2009
TITLE VII–PROTECTING TENANTS AT FORECLOSURE ACT
SEC. 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 or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy. (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).
SEC. 703. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.
Section 8(o)(7) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended–
(1) by inserting before the semicolon in subparagraph (C) the following: and in the case of an owner who is an immediate successor in interest pursuant to foreclosure during the term of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner-- (i) will occupy the unit as a primary residence; and
(ii) has provided the tenant a notice to vacate at least 90 days before the effective date of such notice.'; and (2) by inserting at the end of subparagraph (F) the following: In the case of any foreclosure on any federally-related mortgage loan (as that term is defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law that provides longer time periods or other additional protections for tenants.'.
SEC. 704. SUNSET.
This title, and any amendments made by this title are repealed, and the requirements under this title shall terminate, on December 31, 2012.
So if I’m reading that correctly, the bank (assuming its a federally-related mortgage note) has to give the tenants (assuming they had a bonafide lease) 90 days notice to vacate?
It would be nice if they would start writing laws for the United States IN ENGLISH! lol
I read it as any type of legal occupancy… 90 day minimum… after notice… then there is always the unlawful occupancy action afterward…
Imagine the bank who doesn’t sell at auction to a end user… And that investor or bank, if no one is at auction, must now keep a lease in place and prove that rent is not substantially less than fair market rent. Just thinking out loud that a long term lease that is within “Fair Market” and which is sandwiched might be a new investment strategy.
A investor tenant seems like they can carry this out a long time if they wanted to… Imagine the cash for keys cost now… And doesn’t this make our short sale offer much more valuable for the lender as our purchase isnt a foreclosure purchase and doesn’t have to adhere to the foreclosure laws.
Here in NJ they have to honor the lease.
Residential tenants in New Jersey cannot be evicted solely because the property where they live is in foreclosure or has been foreclosed.
In general, New Jersey law protects tenants against eviction from their homes so long as they:
* pay the rent,
* respect the peace and quiet of their neighbors,
* avoid willful or grossly negligent damage to the property, and
* obey the reasonable rules theyhave agreed to in writing.
Enacted in 1974, the New Jersey Anti-Eviction Act protects residential tenants from losing their homes through no fault of their own. The Act applies whether or not the tenant has a written lease. The Act does not apply to tenants of owner-occupied homes with two or fewer rental units; units set aside for developmentally disabled members of the owner’s immediate family; and hotels, motels and guest houses.
The laws protecting tenants from eviction apply throughout foreclosure proceedings and continue to have effect even after a new owner buys the property.