Law may not protect tenant in foreclosed property
Question: Up until this year, my father owned two homes. He lived in one of them and rented the other to me and my family. My father and I had a written two-year lease and I paid him a reasonable rent, with canceled checks to prove it. Unfortunately, my father lost both homes to foreclosure last fall. In December, a real estate agent came to my door to tell me I had to leave. When I told her I had a lease, she handed me a three-day notice to quit the premises. There was no way we could leave that quickly, and a friend told me the bank that took the house had to honor my lease. Now I have been served with a summons and complaint for unlawful detainer. I have filed an answer stating that I have a valid lease, but I am wondering whether I will win this case. What is your opinion?
Answer: In May 2009, Congress passed the Protecting Tenants at Foreclosure Act, Public Law 111-22. This law provided important new protections for tenants when their rental property is sold at foreclosure.
Tenants in foreclosed properties must be given at least 90 days’ written notice to vacate by the new owner, and if a tenant has a valid lease, the new owner must honor the term of that lease unless the owner intends to personally occupy the property. Where the new owner intends to occupy, the tenant is still entitled to a 90-day notice.
To fall under these protections, however, the tenant must be “bona fide.” The rental agreement must be at the fair market value for the property and it must be the result of an “arms length” transaction. There should be documented evidence that rent was paid, for example by means of canceled checks.
The law also specifically excludes the child, spouse or parent of the previous owner. Since your father was the owner, it looks like the act will not protect you.
Assuming you are not protected by the new law, the current owner needs to serve only a three-day notice for you to vacate the premises. It would have helped you qualify as a tenant when you apply for replacement housing in the future if you had left the property before the eviction case was filed. Now that you are already in court, you should consider negotiating a voluntary move-out agreement with the attorney who filed the case. In some cases, the owner will be flexible on monetary damages in exchange for a voluntary move-out that avoids further court and sheriff’s fees.
Eichner is director of Housing Counseling Programs for Project Sentinel, a Sunnyvale, Calif.-based mediation service. To submit a question, go to https://www.housing.org.
