Protecting Tenants at Foreclosure Act and How It Helps

Usually, when we talk about foreclosure, we immediately think about those people losing their residential homes. However, we should also remember that foreclosures also happen to real estate investors who failed to pay for their properties. In this situation, the tenants are the ones facing a threat of losing the roof above their heads. But that was before the Protecting Tenants and Foreclosure Act was enacted in 2009. Now tenants have more rights, and one of those rights is not getting the surprise factor.

The Protecting Tenants at Foreclosure Act helps tenants of foreclosed properties have ample time to look for a new place to move in.

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What is Protecting Tenants at Foreclosure Act?

The Protecting Tenants at Foreclosure Act of 2009 was signed and enacted by President Barack Obama at the height of the real estate market crash when a lot of houses are going to foreclosure. This law requires the new owners of the property to give the tenants a 90-day notice before they evict them. If the tenants still have a remaining lease, then the new owners cannot evict them except if it’s for a good cause. However, if the lease is less than 90 days, they still have to give another 90-day notice, which is a great thing for tenants. On the other hand, if the new owners bought the property with the intended use as their primary residence, then they do not have to wait for the lease to expire, they can just give a 90-day notice and wait until the tenants vacate the property.

Protecting Tenants at Foreclosure Act’s Requirements

Like any other law, the PTFA has provisions. Not everyone is entitled to it, so if you are any one of these, then this might not work for you.

You are not a ‘bona fide’ lessee. “Bona fide” means that you can’t be the borrower’s husband or wife, parent, son or daughter, if you are any one of these, then you cannot use this law to your advantage.

You are not in an arm’s length transaction. It means that the transaction is not a product of acting independently, not within any pressure from another person, or you are not acting out of duty. If you rented out the property out of coercion, then you cannot use the PTFA.

You are not paying for the fair market rent rates. If you are paying below the fair market rent but you are not a Section 8 voucher holder, then your lessor is not qualified for the PTFA.

Another thing to note about the act is that it will end on December 31, 2012. So at the end of this year, this sunset law will pass, and owners and tenants can no longer use this to their advantage, unless the President extends it.

If you are renting a house and your lessor defaults or experiences problems financially, chances are you will be affected as well. However, if you know about this law, then you will still have enough time to look for a place to move in. If all the provisions of the Protecting Tenants at Foreclosure Act apply to you, then use it to buy time or to earn for rent money and have it work to your advantage.

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