Pub. 1 2010 Issue 2

www.wvbankers.org 6 W est Virginia banks may not be aware that in 2009, as part of its response to the housing crisis, Congress passed The Protecting Tenants at Foreclosure Act of 2009 (the “Act”), which protects tenants from immediate eviction upon foreclosure of loans secured by a lien on residential real property. The Act became effective on May 20, 2009 and will expire on December 31, 2012. The primary purpose of the Act is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing. The Act only applies to foreclosures on loans secured by a lien on residential real property (including a refinancing of any secured loan on residential real property) that are subject to a bona fide lease or tenancy entered into before the notice of foreclosure. A lease or tenancy is considered bona fide under the Act only if : • the tenant is not the mortgagor; • the tenant is not the parent, spouse or child of the mortgagor; • the lease or tenancy is the result of an arms-length transaction; and • the lease or tenancy requires rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a federal, state or local subsidy. Under the Act, the immediate suc- cessor in interest at foreclosure on residential property (referred to as the “new owner”) must provide any tenant with a notice to vacate at least 90 days before the effective date of the notice. In addition, the new owner must allow tenants to occupy the property until the end of the lease term. This means that during the term of the lease, the tenant has a right to remain on the property and cannot be evicted, except for actions that constitute good cause. If the lease ends in less than 90 days, the new owner may not evict the tenant without giving the tenant a minimum of 90 days notice. The only exceptions to the rule that the tenant may not be evicted (except for good cause) dur- ing the term of the lease are (i) when the new owner will occupy the prop- erty and (ii) when there is no lease or the lease is terminable at will under state law. However, even when these exceptions apply, the new owner may terminate the tenancy only if the new owner has provided the tenant with at least 90 days prior notice to vacate. The Act does not affect the require- ments for termination of any federal or state subsidized tenancy and does not Beware of Tenant’s Rights Upon Foreclosure By Sandra M. Murphy, Esq and Amy J. Tawney, Esq. Rights — continued on page 8 The National Low Income Housing Coalition estimates that 40% of indi- viduals losing their homes in foreclosures are renters. In 2009, Congress passed the Protecting Tenants at Foreclosure Act of 2009.