by Paul Prudente
A great deal of attention is given to the need for landlords to work with tenant screening companies to conduct background checks on prospective tenants. That process is described in detailed in a Wikipedia article entitled “Tenant screening” – contributed by MyScreeningReport.com®. Clearly, landlords have an interest in the tenant’s credit profile, since it has a direct bearing on the tenants ability to pay rent.
Less obvious is the interest of tenants in the status of any mortgage on the rental property – specifically, whether the property is at risk of (or in) foreclosure – which of course may impact the tenancy.
There is relatively little risk to tenants with regard to investor-owned multi-family properties – since is it in the interest of most buyers (future investors) to retain tenants. The risk increases, however, in the case of single-family rental properties – many of which are owned and managed by individuals – some of whom have been negatively impacted by the current economy and are at material risk of foreclosure.
Federal law provides some protection for tenants of foreclosed properties. The Protecting Tenants at Foreclosure Act passed by Congress and signed by President Obama in 2009 states that, “In the case of any foreclosure on a federally related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to:
(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and
(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure—
(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or
(B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1), except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.”
Simply stated, federal law requires that tenants of foreclosed properties be allowed to occupy the premises for the term of any bona fide lease but not less than 90 days (from the date of the assumption of interest or sale and serving of required notice). State law may provide additional protections.
This article was written by Paul Prudente and originally published on myscreeningreport