Protection for Tenants in Foreclosed Properties

protectionOn May 20th 2009 President Obama signed a new federal law protecting the rights of tenants in foreclosed properties.

Specifically, the new law will require that the immediate successor in interest at foreclosure:

  • Provide bona fide tenants with 90 days notice prior to eviction
  • Allow bona fide tenants with leases to occupy the property until the end of the lease term.
  • The lease can be terminated on 90days notice if the unit is sold to a purchaser who will occupy the property.

A bona fide lease or tenancy is one where the tenant is not the mortgagor or a memberof the mortgagor’s family.  The lease or tenancy is the result of an arms length transaction, and the lease or tenancy requires rent that is not substantially lower than fair market rent or is reduced or subsidized due to a Federal, State orlocal subsidy.

In the case of any foreclosure on any property in which a recipient of section 8 assistance resides, the immediate successor in interest in such property pursuant to the foreclosure assumes 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.

None of these provisions preempts more protective state and local laws and all of these provisions expire a the end of 2012.

Oakland Housing Authority