PROTECTING TENANTS AT FORECLOSURE | Key Points
- The recently enacted “Economic Growth, Regulatory Relief, and Consumer Protection Act” restored certain provisions of the Protecting Tenants at Foreclosure Act of 2009 (“the Act” or “PTFA”). Under the restored provisions, “any immediate successor in interest” to the foreclosure must provide a bona fide tenant with a 90-day notice to vacate before eviction proceedings may be commenced. PTFA § 702. Additionally, if the tenant entered a bona fide lease before “the notice of foreclosure” the immediate successor in interest must honor the lease for its stated term and then provide a 90-day notice to vacate.
- To be considered a bona fide lease the tenant cannot be the mortgagor or a “child, spouse, or parent of the mortgagor.” PTFA § 702(b)(1). Additionally, the lease must be the result of an “arms-length transaction” and require payment of rent “that is not substantially less than fair market rent.” PTFA § 702(b)(2) and (3).
- The PTFA also provides that “nothing under this section shall affect the requirements…of any State or local law that provides longer time periods or other additional protections for tenants.” PTFA § 702(a)(2)(B). In Florida, the legislature enacted § 83.561, Fla. Stat., which for the most part contains lessor protections for the tenant and will likely be superseded by the requirements of the PTFA. The restored provisions of the PTFA take effect June 24, 2018.