Eviction protection for tenants living in foreclosed homes extended as a result of the recently signed Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). This protection stems from the Protecting Tenants at Foreclosure Act of 2009 which originally protected tenants from eviction because of a pending foreclosure on the property they occupied until December 31, 2012. The Dodd-Frank Act now extends this eviction protection for tenants living in homes in foreclosure until December 31, 2014.
Although the Dodd-Frank Act affords the tenant residing in a home in foreclosure a significant amount of residential security, it does not give the tenant total residential security from eviction. The tenant protection provisions apply in the case of any foreclosure on a “federally related mortgage loan” or on any dwelling or residential real property. This federal protection includes tenants residing in homes pursuant to a federally funded Section 8 Voucher. Generally, a purchaser of a foreclosure property can evict the tenant from the property as a result of the foreclosure after at least 90 days from the effective date of notice. In the past there has been some confusion as to when the date of notice was triggered. That issue has been clarified under the Dodd-Frank Act which in essence states that the date of notice of foreclosure is the date of the completed title transfer either as a result of a court order or due to terms in a mortgage, deed of trust, or security deed. This 90 day notice, however, is subject to a tenant’s lease. In other words, even with the 90 days notice, tenants must be allowed to remain in the property until the end of their lease terms.
There are two exceptions that could apply and result in a tenant being evicted from the foreclosed property sooner rather than later:
- The property is sold after foreclosure to a purchaser who will live in the property as his or her primary residence, or
- There is no lease or the lease is terminable at will under state law.
Keep in mind, however, that even if it is a situation where the two exceptions apply, the tenant must still be given at least 90 days notice before he or she has to vacate the property.
If you are a renter, with the current state of today’s economy, real estate and rental market, it is imperative to have a detailed written lease specifying the terms of your tenancy relating to the property. If you do reside in a property that is in foreclosure or recently foreclosed upon, and you receive a notice to vacate the property, make sure you know your rights. Make sure you let the new owner of the property know that you are aware of the legal protections provided to you and that you expect him or her to follow the law and not to evict you unlawfully. Be prepared to take further legal steps if the new owner intends to proceed with an unlawful eviction.