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This past May, a new law went into effect that did not capture much media attention at the time. The “Helping Families Save Their Homes Act of 2009” became effective May 20, 2009 and included some much needed protection for tenants caught in the crossfire of the foreclosure process. Here is the most common scenario: Landlord becomes delinquent in their mortgage, the foreclosure process begins and in an effort to keep collecting rents as long as possible, the landlord does not inform the tenant of the fact that foreclosure is taking place. The property is sold at Sheriff’s Sale, the bank takes possession and immediately, without notice, begins the tenant eviction process. This unfortunate situation placed numerous tenants, who paid on time and had a valid lease, on the street. This Federal law helps tenants avoid being unfairly evicted and in most cases will supersede state law.

Nothing in this article is intended to be legal advice and anyone who feels this new law is applicable to their situation should consult an attorney. Here are the basic points:

· All tenants, regardless of type of tenancy or existence of a lease, must be given 90 days notice by the “immediate successor in interest”, which could be either the bank or the new owner.

· If a tenant has a valid lease, the terms and conditions of that lease must be honored through the end of the lease. The tenant cannot be evicted prior to the end of the lease.

Here are the exceptions to the rule:

· If the new owner intends to occupy the property as their primary residence, the length of the lease does not have to be honored. The 90 day notice can be immediately served.

· If there is a month to month lease, or no lease or the state law allows the lease to be terminated at any time with proper notice, then a 90 day notice can be served immediately.

· The lease must have been entered into before the landlord received notice of foreclosure.

· The tenant cannot be a spouse, child or parent of the foreclosed owner.

· The tenants must not be paying substantially less than a fair market rent unless certain government subsidies are in place.

· Under any conditions, the tenants may be evicted if they violate the terms of the lease.

The rules are set to expire Dec 31, 2012 so until then, if you are listing a foreclosed property or a property recently purchased at a foreclosure sale that is tenant occupied, the tenant must always be give at least 90 days notice to vacate.

As always, if you have questions, need real estate advice or want to buy or sell a home, you can call or text me at 717-371-0557, email me at Jason@JasonsHomes.com or contact me at the office at 717-490-8999!

Your Friend in Real Estate,
Jason Burkholder

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Jason Burkholder