Tenants Get New Rights When Homes Are Foreclosed
There are any number of reasons why foreclosures are awful and one of them concerns tenants: Until new legislation was signed by President Obama last month tenants could be evicted from a foreclosed home, regardless of whether or not they had a lease or paid their rent in full and on time.
Now, however, the old rules are out and very much better rules are in. Under the?,? Helping Families Save Their Homes Act of 2009, tenants now have new rights.
First, a bona fide tenant must get at least 90 days notice before an eviction.
Second, if a bona fide tenant has a lease, the tenant may stay on the property until the end of the remaining term, except if the buyer of the foreclosure is going to occupy the property as a prime residence — then there must be 90 days notice.
Third, in some cases tenants may be able to hold over even longer. This would be the case for any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.
Bona Fide Tenants
Notice that the legislation does not protect all tenants — only bona fide tenants. Okay, so who is a bona fide tenant?
First, if the borrower or the child, spouse, or parent of the borrower under the contract is not the tenant;
Second, if the lease or tenancy was the result of an arms-length transaction; and
Third, if 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.
For a good explanation of the new rules, see the information posted by the National Low Income Housing Coalition.
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