The Fate of Renters During Foreclosure

Initially when the recession hit and the foreclosure rate went way up some renters were unfairly evicted from their homes with little notice.    Unfortunately at the time apparently there weren't any laws protecting renters in such a situation.  IN response to this problem congress passed the a new law called the Protecting Tenants at Foreclosure Act (PTFA)   It was enacted in 2009.  The details of the law are posted online here.


Generally under PTFA if you have a valid lease that existed before the foreclosure then you can stay at least 90 days after foreclosure as long as you pay rent to the new owners.

Some details of the PTFA :

The tenant can not be evicted until the end of their existing lease or at least 90 days.   If you have a lease then you to stay till the end of the lease.  There is however an exception where if the new owner wants to live in the home they only have to give you 90 days even if you have a lease for longer than that.  If there is no lease then you have at least the 90 days.

You must pay the rent to the new owner.  There is no free ride.

The lease has to have been agreed before the foreclosure started.  
The rent has to be reasonable rate close to fair market.  

The renter must not be a direct relative of the mortgage holder and the transaction has to be 'arms length'.  So you're not allowed to setup a deal with someone in advance or that negates the intent of the law.

So you can't setup a 99 year lease with your buddy for $1 a month and expect that to fly.


The PTFA was written as a temporary measure and unless its renewed the law will sunset (expire) in 2014.