Shortly before the end of the Great Recession, Congress passed the Protecting Tenants at Foreclosure Act (PTFA) of 2009 to protect tenants from post-foreclosure eviction. Although the PTFA’s tenant protections expired on December 31, 2014, they were recently revived when President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act (Senate Bill 2155) into law. Taking effect on June 23, 2018, the Act repealed the “sunset provision of the Protecting Tenants at Foreclosure Act” and restored “notification requirements and other protections related to the eviction of renters in foreclosed properties.”
PTFA
The fundamental purpose of the PTFA is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing.1 To that end, the law establishes a minimum time period that a tenant can remain in a foreclosed property before eviction can be commenced and does not affect any state or local law that provides longer time periods or other additional tenant protections.
Under the law, the immediate successor in interest following any non-judicial or judicial foreclosure of a “federally-related mortgage loan,” dwelling, or residential real property must (a) provide bona fide tenants with 90 days’ notice prior to eviction and (b) allow bona fide tenants with leases to occupy property until the end of the lease term, except the lease can be terminated on 90 days’ notice if the unit is sold to a purchaser who will occupy the property. The PTFA does not require tenants to pay rent to the successor in interest however, any successor in interest may accept rent and, in doing so, assume the rights and obligations of a landlord under Oregon’s Residential Landlord and Tenant Act.
A lease or tenancy is bona fide only if:
(1) The mortgagor or a child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) The lease or tenancy was the product of an arm’s-length transaction; and
(3) The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent or the rent is reduced or subsidized due to a federal, state, or local subsidy.
Now that the PTFA has been restored, bona fide tenants at the time of a foreclosure of residential property will once again be able to take advantage of these protections to help ease the transition to new housing.
1 https://www.federalreserve.gov/boarddocs/supmanual/cch/200911/protect.pdf