The foreclosure crisis is easing but chances remain good that you’ll continue to list and sell foreclosures for a while. If you’ve had tenants in some of the foreclosures you’ve already sold than you’re probably familiar with that 2009 federal law that protects tenants against eviction when the owner loses the property to the lender.
The law is “The Protecting Tenants at Foreclosure Act” and it gives tenants two types of protection, depending on their situation. If they’ve signed a long-term lease agreement with the owner, than they’re entitled to continue renting their home for the duration of that lease agreement. So, if they have nine months to go on their lease when the owner loses the property to foreclosure, than you as the listing agent of that property have to honor that existing lease. That means no eviction or no rent increases (unless a rent increase is part of the existing lease) until the agreement expires.
If they haven’t signed a long-term lease, than they’re entitled to a minimum of three months notice before they have to leave.
There are exceptions to the law and other provisions you have to be aware of, but those are the two basic components.
Learn a little more about the law, and what protections you must accord tenants in these transactions, in this 5-minute video with NAR Regulatory Affairs and the National Law Center on Homelessness and Poverty.
NAR summary of the PTFA.
Full text of PTFA.