Auction investors, REO brokers, and renters take note - significant change to eviction notice requirements

Written by:
Written on:
May 25, 2009
Category:
Not Categorized

Thanks to U.S. Senate Bill 896, the "Helping Families Save Their Homes Act of 2009", as amended with Senate Amendment 1036, the "Protecting Tenants at Foreclosure Act of 2009", tenants are now entitled to stay through the end of their lease, and receive 90 days notice prior to eviction after a foreclosure through out the country. In California this supercedes the 60 days that went into affect with CA Senate Bill 1137 last year.For those of you buying at the auction it is more important then ever to verify occupancy if at all possible prior to making your purchase unless you are prepared to be stuck with a rental for an extended period. Depending on your MLS you may be able to lookup the rental (if it was listed by a Realtor) to find out if is was advertised as a lease or month-to-month rental. If you do happen to buy one with an extended lease don't forget that you can still try to negotiate cash-4-keys, and in the worst case you are at least entitled to the rent.The text of the amendment can be found below, as well as the links above:SA 1036. Mr. KERRY (for himself, Mrs. Gillibrand, Mr. Reid, Mr. Dodd, and Mr. Kennedy) submitted an amendment intended to be proposed to amendment SA 1018 submitted by Mr. Dodd (for himself and Mr. Shelby) to the bill S. 896, to prevent mortgage foreclosures and enhance mortgage credit availability; which was ordered to lie on the table; as follows:At the end of the amendment, add the following:TITLE V--PROTECTING TENANTS AT FORECLOSURE ACTSEC. 501. SHORT TITLE.This title may be cited as the ``Protecting Tenants at Foreclosure Act of 2009''.SEC. 502. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.(a) In General.--In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure pursuant to the foreclosure shall assume such interest subject to--(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure--(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or(B)without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1), except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.(b) Bona Fide Lease or Tenancy.--For purposes of this section, a lease or tenancy shall be considered bona fide only if--(1) the mortgagor under the contract is not the tenant;(2) the lease or tenancy was the result of an arms-length transaction; or(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property.(c) Definition.--For purposes of this section, the term ``federally-related mortgage loan'' has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602).SEC. 503. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.Section 8(o)(7) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended-- (1) by inserting before the semi-colon in subparagraph (C) the following: ``and in the case of an owner who is an immediate successor in interest pursuant to foreclosure--``(i) during the initial term of the lease vacating the property prior to sale shall not constitute other good cause; and``(ii) in subsequent lease terms, vacating the property prior to sale may constitute good cause if the property is unmarketable while occupied, or if such owner will occupy the unit as a primary residence''; and(2) by inserting at the end of subparagraph(F) the following: ``In the case of any foreclosure on any federally-related mortgage loan (as that term is defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume 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, except that this provision and the provisions related to foreclosure in subparagraph (C) shall notshall not affect any State or local law that provides longer time periods or other additional protections for tenants.''.SEC. 504. SUNSET.This title, and any amendments made by this title are repealed, and the requirements under this title shall terminate, on December 31, 2012.

Written by:
Written on:
May 25, 2009
Category:
Not Categorized