Rights of Tenants in Foreclosure
As a paying tenant who follows the principles, the very last thing you should worry about is if your house will be yours while your lease is still active. Alas, many tenants find themselves displaced through no fault of their own, simply because their landlords didn’t cover the mortgage. The amount of tenants displaced due to foreclosure appeared so large, a national initiative passed on to extend security to tenants living in soon-to-be foreclosed properties. Called the Protecting Tenants in Foreclosure Act of 2009 (PTFA), the initiative requires lenders and buyer who purchase foreclosures to honor busy rentals.
Right to Keep the Lease
Tenants using a written lease agreement, and who entered into the lease prior to the initial foreclosure proceedings, are described”bona fide tenants” beneath PFTA. A bona fide tenant has the right to perform the remainder of her lease under the same terms set forth in the initial lease agreement. The new homeowner assumes the position of the landlord and must honor the initial conditions. There is an exception, however, if the new homeowner intends to use the house as his primary residence. In this situation, the new homeowner has no obligation to continue the entire remaining lease, although he should offer adequate notice prior to evicting the tenant.
Right to Adequate Notice
If the new homeowner intends to use the house as her primary residence, she must provide at least 90 days’ notice to the tenant to vacate. The homeowner does not have any jurisdiction to vacate a tenant prior to owning the house, so she can’t count any time prior to finalizing the sale toward the complete 90 days. Tenants have a right to receive notice in writing, which the homeowner should function in person or via courier. The 90-day limitation does not start to run before the tenant physically receives the written notice.
Directly to Utilities
Prior to the enactment of this PFTA, lenders would frequently notify tenants of an impending foreclosure via email, telling tenants that they had as little as 48 hours to vacate the house. If a tenant chose to remain put, some creditors will shut off the power, water and other utilities; other folks might change the locks or even get rid of the front doorway, hoping to induce the tenant out. PFTA currently prohibits lenders from implementing any one of these approaches, and imposes a penalty of up to $100 for every day a creditor turns off a tenant’s utilities. Homeowners are equally illegal, and in reality, are responsible for paying all utilities that the previous landlord paid for the remainder of the lease.
Directly to Tenant’s Basic Rights
Even if the tenant receives a 90-day notice to vacate, he keeps the same rights he would have if the landlord never offered the rental house before the day that he vacates. The new homeowner becomes responsible for keeping the house, completing any required repairs and ensuring that the house stays in a habitable condition. The new homeowner cannot change the terms of the original lease with no tenant’s permission, and the tenant has a right to file a claim against the homeowner if he violates the lease in any way.
Exclusions
Tenants with no written lease are believed tenants”at-will,” otherwise known as a month-to-month lease. No matter any verbal agreement with the previous landlord, most of at-will tenants must vacate the house within 90 days after the new homeowner takes control. Tenants who entered into a new lease after foreclosure proceedings began are also not protected under the action, even if the tenant was unaware of the pending foreclosure actions. However, in this situation, the tenant could still submit a claim against the landlord to recoup cash for prepaid rent, security deposits, expenses incurred due to displacement (for example, hotel prices ), emergency moving costs and damages.