On May 20, 2009, President Obama signed  Senate Bill 896 into law [now Public Law No. 111-22].   Of particular interest to foreclosing lenders and servicers and attorney firms representing these entities is Title VII of the Act, known as the Protecting Tenants at Foreclosure Act of 2009 ["PTFA"].  The Act, establishes a ninety (90) day notice to vacate period and grants additional rights to tenants in foreclosed properties.  While the Act is extremely  broad and vague and has given rise to more questions than answers, it is abundantly clear that the rights of persons or entities purchasing  tenant occupied properties purchased through foreclosure after May 20, 2009, will be significantly impacted.

In short, the central purpose of Title VII of the Act is to provide innocent tenants, whose landlords have lost properties to foreclosure, with additional time within which to secure alternative housing arrangements.  A thorough statement as to the purpose, import and impact of the Act can be found in a recent Federal Register Notice from the Department of Housing and Urban Development (”HUD”) and in a summary of Senate Bill 896.  [Source www.thomas.gov]

Purchasers of foreclosed properties must be aware of the ninety (90) notice requirement and additional rights extended to tenants under the act, including but not limited to the right of certain tenants to continue leasing the property from the new owner(s), and must implement sufficient processes to ensure compliance with the Act.  Over the course of the past weeks and months since the enactment of this law foreclosing lenders and servicers and attorney firms have implemented varying practices and procedures for ensuring compliance.  Due to the “unknowns” associated with the Act, the process is continually evolving.