Protecting Tenants at Foreclosure Act of 2009 – Resurrected and Here to Stay

On May 20 2009, just after the peak of the national foreclosure crisis, a federal statute was enacted to help protect a residential tenant who was renting a unit subject to foreclosure from being evicted without being afforded a reasonable amount of time to find alternative housing.

The federal law was known as “Protecting Tenants at Foreclosure Act of 2009”. It generally provided that a bona fide tenant was authorized to remain in a residential unit that was acquired by a new party through foreclosure for the balance of the unexpired term of the lease, unless the unit was acquired by a party that intended to occupy the unit, in which case the tenant was authorized to remain in the unit for ninety days after receiving a notice to vacate.

For purposes of the federal law, a “bona fide tenant” was a tenant who was not the mortgagor or the parent, spouse, or child of the mortgagor and who was under a lease that was the result of an arms-length transaction where rent was not substantially lower than fair market value.

The federal law assured that residential tenants would have a reasonable amount of time to plan and find alternative housing after the unit they were renting was foreclosed and acquired by a new party. However, it also assisted community associations in finding desirable tenants to rent units they owned through the foreclosure of the association’s assessment lien for a fair market value, which then helped the association recoup unpaid assessments and bad debt otherwise attributable to the unit.

The protections of the federal law were intended to “sunset”, which is a term meaning ”to expire”, on December 31, 2012. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) later extended the sunset date to December 31, 2014. Once the federal law finally expired on January 1, 2015, tenants of residential property in Florida no longer had any special protection from eviction by parties acquiring such units by foreclosure.

Then, approximately six month later, the Florida legislature adopted its own version of the law as part of the Florida Residential Landlord and Tenant Act. Specifically, section 83.561, Florida Statutes, became effective on June 15, 2015, and provides that “if a tenant is occupying a residential premises that is the subject of a foreclosure sale, the purchaser named in the certificate of title is permitted to give a tenant a thirty day notice to vacate and the tenant must comply”. Therefore, as of June 15, 2015, residential tenants had a much shorter timeframe of thirty days’ notice to vacate a unit acquired by foreclosure.

Finally, on June 23, 2018, the federal Protecting Tenants at Foreclosure Act became effective again. It no longer contains any sunset or expiration date; so it is here to stay. Since a federal law will supersede a Florida law when it is more stringent, the provisions of the Federal Protecting Tenants at Foreclosure Act giving tenants more time to vacate residential property after it is acquired by a new party through foreclosure will apply to transactions in Florida despite the shorter time frame provided by state statute.