RISMEDIA, August 21, 2009-Renters need not fear being blindsided by foreclosure and becoming homeless overnight- new federal legislation provides tenants of foreclosed rental property plenty of notice and, more importantly, peace of mind.
President Obama recently signed the Helping Families Save Their Homes Act of 2009 into law, requiring parties who acquire residential property as the result of a foreclosure sale, either to honor existing leases or to provide a written 90-day notice to vacate the property to tenants occupying the residence at the time of the sale.
“This legislation gives some much-needed protection for tenants of foreclosed properties,” says attorney Charlotte Johnson of Gibson Ferrin & Riggs, PLC.
“Many tenants have been living in fear of foreclosure, at no fault of their own, never knowing when they may have to pick up and move the next day,” she says. “They may have had a valid lease and be current on their rent, but their rights were lost once the property was foreclosed. Often, in an effort to keep paying tenants for as long as possible, the landlord would not disclose the upcoming foreclosure to the tenants.”
However, that will no longer be a worry to home renters. “Tenants are rewarded for making timely rent payments under a proper lease agreement, rather than having incentive not to pay rent if they know their landlord is being foreclosed.”
She says that unless the acquiring party intends to personally occupy the property as his or her primary residence, he or she must honor the terms of the existing lease, allowing bona fide tenants to stay for the remainder of the lease term.
“The lease must have been entered into before the landlord received the notice of foreclosure sale,” she adds. In most cases, Arizona tenants can verify whether notice of sale has been given by checking with the recorder’s office for the county in which the property is located.
Other restrictions include that the tenants cannot be a spouse, child or parent of the foreclosed mortgagor, or owner; and the tenants must not pay substantially less than the fair market rent for the property, unless they are certain government-subsidized tenants.
Johnson points out that, more often than not, the acquiring party is the mortgage lender or an investor who may actually prefer to keep the tenants, considering the slow pace that foreclosed properties are being turned over. “If tenants do not qualify as having a bona fide tenancy, as described in the Act, or in the rare event the acquiring party intends to personally occupy the property, tenants will still have at least 90 days notice to make new living arrangements,” she says. Now, rather than rely on insensitive landlords, it becomes the acquiring party’s duty to give notice to the tenants of the sale,” Johnson explains.
This program is scheduled to expire on Dec. 31, 2012.
For more information, visit www.gfrlegal.com.
Copyright© 2015 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.
Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com