New Federal Law Protects Renters from Eviction After Property Foreclosure

RISMEDIA, August 21, 2009-Renters need not fear being blindsided by foreclosure and becoming homeless overnight- new federal legislation provides tenants of foreclosed rental property plenty of notice and, more importantly, peace of mind.

President Obama recently signed the Helping Families Save Their Homes Act of 2009 into law, requiring parties who acquire residential property as the result of a foreclosure sale, either to honor existing leases or to provide a written 90-day notice to vacate the property to tenants occupying the residence at the time of the sale.

“This legislation gives some much-needed protection for tenants of foreclosed properties,” says attorney Charlotte Johnson of Gibson Ferrin & Riggs, PLC.

“Many tenants have been living in fear of foreclosure, at no fault of their own, never knowing when they may have to pick up and move the next day,” she says. “They may have had a valid lease and be current on their rent, but their rights were lost once the property was foreclosed. Often, in an effort to keep paying tenants for as long as possible, the landlord would not disclose the upcoming foreclosure to the tenants.”

However, that will no longer be a worry to home renters. “Tenants are rewarded for making timely rent payments under a proper lease agreement, rather than having incentive not to pay rent if they know their landlord is being foreclosed.”

She says that unless the acquiring party intends to personally occupy the property as his or her primary residence, he or she must honor the terms of the existing lease, allowing bona fide tenants to stay for the remainder of the lease term.

“The lease must have been entered into before the landlord received the notice of foreclosure sale,” she adds. In most cases, Arizona tenants can verify whether notice of sale has been given by checking with the recorder’s office for the county in which the property is located.

Other restrictions include that the tenants cannot be a spouse, child or parent of the foreclosed mortgagor, or owner; and the tenants must not pay substantially less than the fair market rent for the property, unless they are certain government-subsidized tenants.

Johnson points out that, more often than not, the acquiring party is the mortgage lender or an investor who may actually prefer to keep the tenants, considering the slow pace that foreclosed properties are being turned over. “If tenants do not qualify as having a bona fide tenancy, as described in the Act, or in the rare event the acquiring party intends to personally occupy the property, tenants will still have at least 90 days notice to make new living arrangements,” she says. Now, rather than rely on insensitive landlords, it becomes the acquiring party’s duty to give notice to the tenants of the sale,” Johnson explains.

This program is scheduled to expire on Dec. 31, 2012.

For more information, visit http://www.gfrlegal.com.

The following is my opinion (based on experience); it's not legal advice.

Actually, I learned from one of my mentors (who happens to be a real-estate attorney who also invests in TX [but practices in other markets]) that one doesn't necessarily have to have the title in one's name in order to have a claim--that of course can be disputed--for a property; instead, he stated one needs some form of equitable interest. He explained that it's the concept of equitable interest that allows a potential buyer to control a property that's under contract, before that transaction closes. He also pointed out the following: although some legal experts will argue Lynn's position that an option alone doesn't establish equitable interest in a property, and some legal experts will oppose that position, many legal experts agree that a recorded option does establish equitable interest in a property--and the courts tend to support this position.

He also mentioned that his real-estate attorney in TX (yes, attorneys also hire attorneys :-) pointed out certain legal peculiarities in TX law as it pertains to lease-options--that were put in place as a result of some of the bad practices like what the OP has described. (TX law cracks down on questionable practices like the aforementioned, and several other states are trying to enact similar legislation.)

Nevertheless, regardless of whether you could eventually establish the fact that you have equitable interest in the property, you might not have enough time to execute that strategy. If your goal is to get the property, then you'll need to execute strategies like the ones I mentioned before. However, if your goal is to recover your monetary losses, then you'll need to hire a real-estate attorney to pursue that equitable interest angle (and anything else that s/he can find against the seller/landlord).

Your option resolve issues of move however you are governed by the terms of lease agreement unless current property owner allows you out. You have no right title is not in your name.

Happy assist you in search for another property.

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Unfortunately this is common. The legislature outlawed "rent to own" a couple of years ago, but there are still people out there selling this.

You probably need to get an attorney involved. You should also contact the lender ASAP. You may be able to make rent payments directly to the lender and live out your lease. Unfortunately your deposit may be gone.

The following is my opinion (based on experience); it's not legal advice.

I'd contact a RE attorney ASAP if I were you. Your attorney then push the seller either to give you the authorization that you'll need to negotiate the short-sale, or you might be able to go after the seller personally. You could check the county clerk of court records to find out which lender/entity filed the foreclosure action, and you could let them know about your intent to buy the property..

I would contact a Real Estate Lawyer asap. They might be able to get answers from the homeowner and review your purchase contract to see if you have any recourse against the seller. Unfortunately most lease purchases do not have many protections for the buyer if the seller does not fulfill the purchase agreement. Until the buyer pays for the property in full and gets the deed the seller is the homeowner.

I just had to deliver news to a neighbor who is renting a house this afternoon that it is scheduled for the auction on 9/1. They had no idea either and have been making their payments on time all along.

In order for the home to be on the list, he has to be behind on his payments several months, not just one. Something is up. You need to start making arrangements to find a new place. You can hope that it doesn't sell on 9/1 and you will have time to move out.

So sorry for your predicament.

Naima
214-289-8555
Naima@Sumner-Realty.com

If you are going to stop foreclosure by the 1st of September, you need to move quickly. Allen makes some good points that I don't need to repeat. However, you will not be able to talk directly to the bank on this loan without a signed authorization from the owner.

A short sale could postpone the foreclosure if the required paperwork is submitted to the lender by the homeowner but that would need to be done by early next week. I would continue trying to reach the homeowner, let him know a short sale can save the home from foreclosure (their advantage) , find someone who has experience in short sales and purchase the home yourself if you can qualify for a loan at this time.

Contact us as we specialize in short sales and have a network of realtors in your area. 832-330-4588

I'm so sorry this has happened to you. There IS probably reason to worry regardless of what the assistant says. Sept 1st is the first Tuesday of the month on which foreclosures take place. If it IS on the foreclosure list, this means that the owner is likely several months behind already. If the mortgage company can't get money out of the owner then the chances of you doing that are slim as well. I don't know the details of your agreement, but this is one reason I don't do lease/purchase options. They can be difficult to enforce. There is the possibility of putting in an offer and getting it under contract (with the banks' blessing) and see if they will postpone the foreclosure long enough to close on it. It is expensive for banks to foreclose, and they don't want to... they just need to be brought current or paid off. Sometimes banks will take less than the balance owed in a "short sale" if the owner owes more than the house is worth. Feel free to contact me with more information and I'll be glad to help.