Tuesday, December 4, 2012

PTFA does NOT expire December 31, 2012

The Protecting Tenants at Foreclosure Act is a Federal law that went into effect during 2009 as part of a larger Act called the Helping Families Save Their Homes Act of 2009, Title VII, Public Law 111-22. The Act gave additional protection to innocent third-party tenants renting and occupying premises that went into foreclosure. The Act was intended as a temporary expedient and it was originally slated to expire on December 31, 2012.

 However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) changed the expiration date to December 31, 2014.

The provisions of the Act, as amended, are set out in 12 USC § 5220 note. Literally, in the notes to that section, but also provided here:

Effect of Foreclosure on Preexisting Tenancy  
 Pub. L. 111–22, div. A, title VII, § 702,May 20, 2009, 123 Stat. 1660, as amended by Pub. L. 111–203, title XIV, § 1484(1),July 21, 2010, 124 Stat. 2204, provided that: 
“(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 [May 20, 2009], any immediate successor in interest in such property 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 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 or the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy. 
 “(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).”

Louisville Legal Aid Society, Tenants and Foreclosure: Questions and Answers About Rights for Louisville Renters - Kentucky Law

Jennings Strouss, Attorney, What You Need to Know About the "Protecting Tenants at Foreclosure Act"