With the collapse of the real estate market and the resulting bank foreclosures on hundreds of thousands of residential rental properties, often, tenants residing as leaseholders in residential properties become collateral victims and are forced to vacate their leaseholds, often with minimal notice.
As a result one of the most frequently asked questions posed to real estate lawyers today is "What are the rights of a tenant when the property they are occupying has been foreclosed by the bank?"
The Obama Administration in a bill enacted and approved in May of 2009, known as the Protecting Tenants at Foreclosure Act of 2009 as part of Title VII of the Helping Families Save Their Homes Act of 2009 and codified at 12 U.S.C. 5220.
This law was enacted during a period when unprecedented numbers of foreclosures were occurring across the country, the Act ensures that tenants receive appropriate notice of foreclosure and are not abruptly displaced.
Under the new law, a lender or other immediate successor-in-interest, generally, the purchaser who acquires residential real property by virtue of a foreclosure sale on a federally - related mortgage loan, must provide bona fide tenants residing in the property with notice to vacate of at least 90 days. 12 U.S.C. 5220 (a)(1)
The new law provides that if the tenant in possession has in effect a valid and existing bona fide lease the purchaser at the foreclosure sale takes the residential real property subject to any remaining term of the lease.
These provisions, however, do not apply where the purchaser at the foreclosure sale is not the bank or an investor but a purchaser who intends to occupy the property as a primary residence.
Additionally, to fall within the act a bona fide lease must be entered into prior to the date of the notice of foreclosure, which is defined as ''the date on which complete title to a property has been transferred to a successor entity or person as a result of an order of a court or pursuant to the provisions in a mortgage, deed of trust, or security deed.''
As defined by the act, a bona fide lease is one in which: (1) The mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property. 12 U.S.C. 5220 (a)(2)
The protections afforded by this new law will be in place till December 31, 2014, when they are set to expire.
Mitchell Reed Sussman has been a real estate attorney and broker licensed in the state of California for the past thirty years. His firm specializes in real estate, foreclosure and bankruptcy litigation.
As a result one of the most frequently asked questions posed to real estate lawyers today is "What are the rights of a tenant when the property they are occupying has been foreclosed by the bank?"
The Obama Administration in a bill enacted and approved in May of 2009, known as the Protecting Tenants at Foreclosure Act of 2009 as part of Title VII of the Helping Families Save Their Homes Act of 2009 and codified at 12 U.S.C. 5220.
This law was enacted during a period when unprecedented numbers of foreclosures were occurring across the country, the Act ensures that tenants receive appropriate notice of foreclosure and are not abruptly displaced.
Under the new law, a lender or other immediate successor-in-interest, generally, the purchaser who acquires residential real property by virtue of a foreclosure sale on a federally - related mortgage loan, must provide bona fide tenants residing in the property with notice to vacate of at least 90 days. 12 U.S.C. 5220 (a)(1)
The new law provides that if the tenant in possession has in effect a valid and existing bona fide lease the purchaser at the foreclosure sale takes the residential real property subject to any remaining term of the lease.
These provisions, however, do not apply where the purchaser at the foreclosure sale is not the bank or an investor but a purchaser who intends to occupy the property as a primary residence.
Additionally, to fall within the act a bona fide lease must be entered into prior to the date of the notice of foreclosure, which is defined as ''the date on which complete title to a property has been transferred to a successor entity or person as a result of an order of a court or pursuant to the provisions in a mortgage, deed of trust, or security deed.''
As defined by the act, a bona fide lease is one in which: (1) The mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property. 12 U.S.C. 5220 (a)(2)
The protections afforded by this new law will be in place till December 31, 2014, when they are set to expire.
Mitchell Reed Sussman has been a real estate attorney and broker licensed in the state of California for the past thirty years. His firm specializes in real estate, foreclosure and bankruptcy litigation.
About the Author:
Looking to find the latest information on real estate, bankruptcy and foreclosure, then visit http://www.newportbeachlitigationattorney.com to find the best advice on real estate, bankruptcy and foreclosure for you.