Tenants' rights protected in foreclosed rental properties

On May 20, provisions immediately went into effect which protect tenants living in foreclosed dwellings. The provisions are part of the Helping Families Save Their Homes Act of 2009 that was signed into law by President Obama on May 20.
While most of the attention of the law focused on programs helping homeowners facing foreclosure keep their homes, South Carolina Department of Consumer Affairs attorney Lil Ann Gray says little notice was paid to that section of the law pertaining to tenants of residential rental property which requires that a new owner who takes title to residential rental property thorough foreclosure must honor existing leases until the end of the lease term.”Title VII, which is entitled the Protecting Tenants in Foreclosure Act, pretty much passed under the radar and didn’t get a lot of news time. it became law may 20 2009. this particular section applies to all foreclosures, both state and federal, that involves residential real property.”
Gray says according to the law, all tenants must get a minimum 90 day notice prior to eviction due to foreclosure.
Gray points out that their are some exceptions to the rule in which the new owner must honor existing leases until the end of the lease term. A tenant can be compelled to vacate the property in a shorter period of time. “This would apply if the residential property is a single family dwelling and the person who has acquired ownership of the property through foreclosure plans on making that their personal residence, then they can give the current tenant a 90 day notice.”
Gray says the other exceptions are if the tenant has a lease with an existing term of less than 90 days to the end and if the existing lease is a month-to-month tenancy.
Gray says you will not see the law posted in a leasing office. The key point is that this law does not take affect on rental property unless the property is in foreclosure and a new owner acquires the property. “The triggering event is that the property is acquired by some person or entity as a result of a foreclosure and then the notice has to be given to the tenant as what his rights are including the recognition of the leasing contract. Typically in that case the new owner is required to honor the contract, they likewise are entitled to receive the rental proceeds.”
Gray says an effort to define the rights of a tenant of rental property in state law fell short in the legislature. “This year in the General Assembly in South Carolina a bill was introduced that would have given tenants rights to not be forcibly evicted and put out in the street. Unfortunately that particular bill remained in subcommittee at the end of the session.”

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