Will Obamas Protecting Tenants at Foreclosure Act Help Me?

On May 20, 2009, President Obama signed into law the Helping Families Save Their Homes Act of 2009, which includes Title VII, Protecting Tenants at Foreclosure Act(the “Act”).  The Act provides that in the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property, the party taking title to property pursuant to the foreclosure assumes the property subject to the rights of any bona fide lease holder.  To be considered a bona fide lease, three requirements must all be met: “(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.”

If the foreclosing party wishes to evict a tenant without a lease or with a lease terminable at-will, s/he must provide the tenant with at least ninety days notice to vacate. However, if a bona fide lease was entered into before the date of the foreclosure, the tenant has the right to remain at the property until the end of the lease term, except that the lease may be terminated (with ninety days notice) prior to the expiration of the lease if the purchaser will occupy the property as a primary residence.  The Act also sets forth specific protections for Section 8 tenants, and includes a provision stating that any state or local law providing for longer time periods or other additional protections for tenants shall not be affected by the Act.