Update to Protecting Tenants at Foreclosure at of 2009

Foreclosure Investing
1

Am I correct in reading the May, 2011 update to the Protecting Tenants at Foreclosure act of 2009? What do you think?

As a clarification to SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY, the update states the date of a “notice of foreclosure” is defined as the date on which complete title to a property is transferred to a successor entity…

After purchasing a auction property, I used to believe that if a renters lease was signed before the NOD, you had to honor it. If it was signed after the NOD, you had to give only a 90 notice. This update seems to say that if a 5 year lease is signed the day before the Trustees Sale, you have to honor it or pay a bribe to get possession of your property.

Please tell me I am wrong. Also, I am in Ca., so the obviously doesn’t help.

This update is here…
http://www.occ.treas.gov/publications/publications-by-type/comptrollers-handbook/ptfa.pdf

2

Manny,

I believe your interpretation is correct. The amendment to the Protecting Tenants in Foreclosure Act (PTFC) clarifying re ?notice of foreclosure?
date, appears to give extra protections to tenants. Trustee sale (auction) day is now the effective ?date-stamp? whereby a lease agreement, if executed before said date, may have to be honored to term, unless one or more of the PTFC exemptions apply.

But the PTFA does not preempt state or local laws that provide ?greater protections? to tenants, and many states including California have continued to legislate. More on state and local law here > http://nhlp.org/node/1341

And here > http://www.frascona.com/resource/war111_protecting_tenants_foreclosure_act_eviction.htm

There is also a new CA Landlord-Tenant Disclosure Law (California SB 1191) which has very recently passed through CA legislative process (see summary below) and is now awaiting either a signature (into law) or veto by Gov Brown

http://www.mercurynews.com/opinion/ci_21219503/samantha-james-california-foreclosures-tenants-should-have-rights

http://www.leginfo.ca.gov/pub/11-12/bill/sen/sb_1151-1200/sb_1191_cfa_20120430_161501_sen_comm.html

This bill would require a landlord who has received a notice of default (NOD) to disclose that notice to any prospective tenant prior to entering into a lease agreement for the property.

This bill would require a landlord who is in default under a mortgage or a deed of trust and who has received an NOD to notify a prospective tenant of that default in writing prior to executing a lease agreement for the property. This provision would apply only to single-family dwellings or a multifamily dwelling not exceeding four units.

This bill would provide that a violation of the bill would void the lease at the election of the tenant and entitle the tenant to recovery of twice the monthly rent or twice the actual damages, whichever is greater, and all prepaid rent from the landlord.

This bill would specify that in lieu of the remedies described immediately above, if the tenant elects not to terminate the lease and the foreclosure sale has not occurred, the tenant may elect to deduct twice the monthly rent from future rent obligations.

This bill would provide that the required notice be in substantially the following form:

?The foreclosure process has begun on this property, and this property may be sold at foreclosure. If you rent this property, and a foreclosure sale occurs, the sale may affect your right to continue to live in this property in the future. Your tenancy may continue after the sale. In order for the new owner to evict you, the new owner must provide you with at least 50 days’ written eviction notice or 90 days if required by any other provision of state or federal law. However, some laws may prohibit eviction.?