Good News For Landlords and Tenants
Up until 2009, the law stated that any lease or rental agreement that was entered into AFTER a notice of foreclosure was served wasn’t protected by the Protecting Tenants at Foreclosure Act of 2009. This meant that tenants weren’t guaranteed the right to be able to stay for the full term of the lease. A tenant could be evicted just by the lender or new owner by simply filing some paperwork with the courthouse. However, when the Dodd-Frank Wall Street Reform and Consumer Act was put into play landlords were able to continue collecting rent checks and tenants were allowed to stay on their property for the full term of the lease even though the house was in the foreclosure process.
The “Dodd-Frank Act” changed that definition in a big way by allowing landlords to rent their homes out to a qualified for fair market rent even though the home was in active foreclosure, just along as the foreclosure or transfer of title didn’t actually happen yet. This meant that a tenant’s lease would be honored for the entire term of the lease as long as it was reasonable in relation to normal lease agreements. The law also states that if someone buys the property at the foreclosure sale and intends to occupy the property as his or her primary residence, then they have the right to evict the tenant after 90 days from the transfer of the title to the new owner. Lenders or investors must wait out the entire term of the lease before starting the eviction process.
Benefit to Tenants and Landlords in Foreclosure
Before the law was put into place, landlords that were in the process of foreclosure could still rent their house out but by law they had to inform the tenant of what was going on as well as let them know that whenever the foreclosure happened, that they only had 90 days after the foreclosure sale, just as long as the lease was signed and executed prior to the bank serving the notice of foreclosure. Now, it doesn’t matter when the lease was written and executed, the renter is allowed to stay for the entire term of the lease, unless the new buyer plans to occupy the property as their primary. And since the majority of foreclosures are bought by the lenders or investors that intend to resell or rent the property, this encompasses most foreclosures.
As an Orlando real estate agent, I’ve helped both tenants and landlords find feasible solutions to their housing and real estate needs. Sometimes the answer to their problem has always been there and it’s just a matter of educating people on their options according to the law. Once people know what they are and what they aren’t allowed to do, the solution will usually appear. The laws that I wrote about in this article apply nationwide so realtors should be aware of these options that are currently available to their clients.
My name is Jenny Zamora RE Broker and my passion is helping people in distress find effective solutions to their real estate needs.