Tenants Living in Properties in Foreclosure

Good news for tenants living in properties in foreclosure!

A common problem in South Florida is that landlords receive rents from tenants and then don’t pay the mortgage. In the past, the tenants were evicted from the property at the end of the foreclosure. That changed, however, with the passage of the Protecting Tenants at Foreclosure Act of 2009, which became law on May 20, 2009. The terms of the federal act were incorporated into the courts in Palm Beach through Administrative Order 3.307 on June 27, 2009.

The new law guarantees almost all tenants at least 90 days after receiving notice of foreclosure before they can be evicted from their homes.

So if you’re the tenant, how do you know how long you can stay in the house if the bank forecloses?

• If the new owner plans to use the property as a personal residence, you get at least 90 days to vacate. This applies whether or not you have a lease.
• If, however, the new owner isn’t going to use the property as a personal residence, you get to stay in the home until your lease expires.
• In the case of tenants without a current lease, the new owner must nonetheless provide the tenant with a minimum of a 90-day written notice before terminating the tenancy. This also applies where there is an unexpired written lease which has less than 90 days remaining.

One important point: leases have to be “bona fide” in order for the tenant to qualify for this protection. To be considered a bona fide lease, three requirements must all be met: “(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.”

Our firm has extensive experience helping tenants living in homes that are in foreclosure to know their rights. For a free consultation, please make an appointment with our office.