On May 24, 2018, President Trump signed a bill into law called the “Economic Growth, Regulatory Relief, and Consumer Protection Act” (hereinafter “Consumer Protection Act”). Public Law No. 115-174 Title III, Consumer Protection Act, § 304. Among other things, the Consumer Protection Act restored “the notification requirements and other protections related to the eviction of renters in foreclosed properties” as provided under Sections 701 through 703 of the Protecting Tenants at Foreclosure Act (“PTFA” or “the Act”). PTFA, § 304.  The PTFA was initially enacted in 2009, but included a “Sunset Provision” which provided an expiration date of December 31, 2014. PTFA § 704.

Under the restored provisions of the PTFA, “any immediate successor in interest” to a foreclosed property “shall assume such interest subject to” a bona fide tenant.  PTFA § 702(a). This means that before beginning eviction proceedings, the bank must first determine whether there is a “bona fide lease” affecting the property. 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).

If the tenant entered the bona fide lease before “the notice of foreclosure,” an undefined term in the Act, then the tenant is entitled to “occupy the premises until the end the remaining term of the lease.” In the case of an at will lease or no lease at all, the tenant is entitled to a 90-day written notice to vacate. The Act does provide an exception to these requirements in the event the “immediate successor in interest” will occupy the unit as a primary residence. However, even in that case, the bona fide lease will not be terminated until expiration of the 90-day notice to vacate. PTFA § 702(a)(2)(A).

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 provides a shorter 30-day period for the notice of eviction and does not require the new owner to honor any bona fide lease in existence before the notice of foreclosure. Due to these “lessor” protections, ostensibly, the requirements of the PTFA supersede those of § 83.561, Fla. Stat. The one exception to this may be § 83.561(1)(b), Fla. Stat., which provides the tenant “is entitled to the protections of s. 83.67.” This section, entitled “Prohibited practices,” enumerates several restrictions placed on a landlord and is not included in the PTFA. Presumably, since it is an “additional protection” for a tenant, compliance with § 83.561(1)(b), Fla. Stat., will still be required even after the enactment of the PTFA.

Although the PTFA provisions contained in §§ 701-703 were in effect from 2009 to 2014, one can anticipate continued litigation at the trial court level as to who qualifies as an “immediate successor in interest,” what constitutes “notice of foreclosure” and what constitutes a “bona fide lease.” There is very little precedential case law interpreting and applying these provisions, while there are thousands of circuit court cases that have dealt with the PTFA.

The anticipated effect of the PTFA on the mortgage industry is to delay and complicate the eviction process after a bank successfully forecloses its mortgage lien. Banks that purchase a property at a foreclosure sale will need to factor in at least an additional 90-120 days to complete an eviction, likely more, until procedures can be streamlined to determine who constitutes a bona fide tenant and the earliest a 90-day eviction notice can be sent. The restoration of Sections 701 through 703 of the Act will take effect on June 24, 2018.