ICFE eNEWS #09-11 - June 18th 2009
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New Protections for Tenants in Foreclosed Properties


New Protections for Tenants in Foreclosed Properties

President Obama signed S. 896, P.L. 111-22, on May 20, 2009. This bill includes a nationwide 90 day pre-eviction notice requirement for tenants in foreclosed properties. The provisions of the bill are effective on enactment, May 20, 2009.

Specifically, the new law will require that the immediate successor in interest at foreclosure
1. provide bona fide tenants with 90 days notice prior to eviction and
2. allow bona fide tenants with leases to occupy the property until the end of the lease term except the lease can be terminated on 90 days notice if the unit is sold to a purchaser who will occupy the property. A bona fide lease or tenancy is one where the tenant is not the mortgagor or a member of the mortgagor's family, the lease or tenancy is the result of an arms length transaction, and the lease or tenancy requires rent that is not substantially lower than fair market rent or is reduced or subsidized due to a Federal, State or local subsidy. For section 8 tenants the new law amends section 8(o) to provide that in the case of an owner who is an immediate successor in interest pursuant to foreclosure during the term of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner (i) will occupy the unit as a primary residence and (ii) has provided the tenant a notice to vacate at least 90 days before the effective date of such notice. In addition, in the case of any foreclosure on any property in which a recipient of section 8 assistance resides, the immediate successor in interest in such property pursuant to the foreclosure assumes such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit.

None of these provisions preempt more protective state and local laws and all of these provisions expire at the end of 2012.

Frequently Asked Questions and Answers from the National Low income Housing Coalition about: NOTICE TO TENANTS OF BUILDINGS SOLD AT FORECLOSURE AFTER MAY 20, 2009

Can the person who buys the building at foreclosure make me leave right away?

The new owner needs to end your tenancy by giving you a 90-day notice to leave.
If you have an unexpired lease, you may be able to stay until the end of the lease.

What can I do if the new owner says I have to leave in less than 90 days?

You can send a letter telling the new owner about the law. Keep a copy of the letter you send.
It may help to go to the post office and pay for a return receipt to make the new owner sign to prove they got your letter.
If you get in the mail a green receipt signed by the new owner, save that receipt.
You must also offer to pay the new owner your rent.

What happens if I don't pay the new owner rent?

The new owner can send you a letter giving you notice to pay or move.

What if I have a one-year lease that has more than 90 days left?

In most cases, the new owner cannot evict you until the end of the lease. There are two exceptions.
If the new owner wants to use your home as their primary residence, the new owner only has to give you a 90-day notice to leave after they become the owner.
If you do not pay your rent, the new owner only has to give you a written notice.

What if the new owner files an eviction?

File an answer with the court that says the new owner failed to give the notice required by the Protecting Tenants at Foreclosure Act, Pub. L. No. 111-22, S702 (2009).
Go to court on the date the court sets for a trial.
Take with you to court:
1. the copy of your letter to the new owner.
2. the green return receipt, if you received on.
3. the copy of the new law that is attached to this notice.
4. a copy of your lease, if you have one.

What if I am a section 8 tenant?

You have all of the rights listed above regarding your lease and the requirement that the owner give you a 90-day notice to leave.
You also have additional protections.
The Section 8 Housing Assistance Payment contract continues.
The foreclosure is not a lawful reason to terminate your lease.
Call your Section 8 worker and tell the worker what is happening.

Thanks to Larry Gardella, Legal Services of Alabama and to the National Housing Law Project.
From: NLIHC.org
For additional information, please contact Danna Fischer, 202 507-7462 or danna@nlihc.org

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation).  The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. 
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org).  CASDRAP disbanded in 2010, shortly after the web site project was completed.  In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.

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