The Protecting Tenants at Foreclosure Act of 2009 provides additional protections for certain tenants in a foreclosed residential property. The Act is effective from May 20, 2009 until December 31, 2014.
Tenants with a bona fide lease that was signed before a notice of foreclosure can reside in a foreclosed home under the terms of their lease for at least 90 days. The new owner must give a notice to vacate to the tenant at least 90 days in advance of the termination date. The tenant must pay rent under the terms of their lease, although the rent will be paid to the new owner after the date of the foreclosure sale. Some states provide additional protections to tenants in foreclosed homes.
A bona fide lease is defined in the Act as one in which:
– The tenant is not the borrower or the child, spouse, or parent of the borrower.
– The lease or tenancy was the result of an arms-length transaction in which neither landlord nor tenant has a familial or prior business relationship.
– The rent is an amount considered to be fair market rent or close to it, or the unit’s rent is subsidized by local, state, or federal funds.