Expiration of Protection for Tenants in Foreclosure

Jacksonville, FL Tenants in Foreclosure

When lenders pursue foreclosure of a home, it is not just the homeowner that is impacted. If the property is being rented, the tenant will also be negatively impacted but with fewer rights to assert than the landlord, property owner. During the height of the housing crisis, the nation saw a sharp increase in the number of tenants being evicted mid-lease by lenders or new owners often with virtually no notice.  Some  estimates indicate that up to 40% of foreclosures involve renters. tenants in foreclosure

Protecting Tenants in Foreclosure

Though mid-lease evictions of compliant tenants seems unfair, it was perfectly legal under most state foreclosure and landlord-tenant laws.  Recognizing the substantial burden on tenants, federal lawmakers took action and passed the Protecting Tenants at Foreclosure Act of 2009 (PTFA).
The PTFA permitted tenants to stay until the termination of their lease, or in the case of a month-to-month tenancy or where the new owner would occupy the premises, for 90 days after notice from the new owner.  The PTFA afforded tenants much needed relief by providing them with a reasonable amount of time to search for and secure new housing.

Expiration of PTFA

The original PTFA, intended to be a temporary measure to protect tenants in foreclosure, was set to expire on December 31, 2012 but it was extended until December 31, 2014 by the Dodd-Frank Act.  During 2014, there were numerous calls to extend the act again, but Congressional talks reached a standstill and the PTFA expired as 2015 began.
When tenants in foreclosure can be evicted is now governed exclusively by state law and a number of states have protections for tenants, some as strong or stronger than the PTFA’s protections.  Unfortunately, Florida is not one of those states and tenants in foreclosure have no additional protections.
Tenants can try to pursue legal action against their former landlord for breach of contract to try to recover security deposits and any damages (like cost of seeking new housing) suffered as a result of the foreclosure.  As a practical matter this often proves difficult because the homeowner is almost always facing foreclosure because they are suffering from financial difficulties and for this reason, collecting a judgment may not be possible.
Only a little over a month past the PTFA’s expiration date, it is not yet clear what the practical impact of the act’s expiration date will be.  There may be voluntary compliance with PTFA protections to avoid negative publicity for kicking tenants to the curb without forewarning.

 Market News Is Good News for Tenants in Foreclosure

Nationally and in Florida, the number of foreclosures has been consistently declining.  This is good news not only for tenants as well as homeowners.  It decreases the risk of being evicted from a rental due to foreclosure.

Questions About Foreclosures in Florida?

Though on the decline, Florida still has one of the nation’s highest foreclosure rates and lenders continue to pursue foreclosures of homes with seriously delinquent mortgages.  If you have questions about Florida foreclosure, or want to learn more about defending against it, contact that Jacksonville bankruptcy attorneys at Adam Law Group today.