Protecting Tenants at Foreclosure Act of 2009

Ever since boom went bust, residential tenants have suffered as collateral damage. Many Florida families have become suddenly homeless through no fault of their own, when their landlords lost their rental homes to foreclosure. Imagine. It's the middle of the month. You paid your rent on the first. You just paid your utilities. The kids are happy in school. You're getting settled into a new job. Finally! And then the sheriff comes to the door and tells you that you have 24 hours to move.

 

It happens everyday. It isn't supposed to happen anymore, but it does. The not so new federal law, Protecting Tenants at Foreclosure Act of 2009, has upset long standing practice that foreclosure will almost always extinguish an existing lease. Some states, being proactive, began enacting legislation that would offer tenants protection prior to 2009. Not so in Florida. Florida has not been able to enact a single new law that would protect tenants in foreclosure. Several bills died in committee. Nothing has been accomplished. 

  

If a residential tenant does not have a lease and the property goes into foreclosure after he moves in, the tenant has 90 days to leave the property. If the tenant has a lease and the lease went into effect before the foreclosure began, before the lis pendens, was served, the lease remains in full force for the entire remaining time on the lease.

 

SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.
(a) In General- In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to--

2. the rights of any bona fide tenant, as of the date of such notice of foreclosure--
   (A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence …
   

(B)(b) Bona Fide Lease or Tenancy- For purposes of this section, a lease or tenancy shall be considered bona fide only if--
(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length transaction; and
(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.

SEC. 704. SUNSET.

This title, and any amendments made by this title are repealed, and the requirements under this title shall terminate, on December 31, 2014.

In researching this issue, I could not find any Florida cases that relied on the PTFA. At first, I couldn't understand why, and imagined that it is only because the system is slow to respond to new laws. However, I found an article by Tony Guo (2011), “Tenants at Foreclosure: Mitigating Harm to Innocent Victims of the Foreclosure Crisis”. He states: “However, since the passing of the federal legislation in 2009, Florida's reaction has been one of minimum compliance, and has not been particularly tenant friendly.” (Guo:23).

If you don't know your rights, you don't have any.

Landlords and Tenants

Tenants are bad children. Even good tenants are bad sometimes, or bad sooner or later. And the part about tenants being children, well ... ask any landlord. The demands, the lies, the messes. We try to love them anyway. Long time landlords have a long standing love hate relationship with their tenants, always have always will, but the trade off is worth it – most of the time. Over the holidays I delivered a three day notice for a lady in Boston who has a rental condo in Sarasota. I didn't exactly deliver it, I posted it on the front door and took a picture. In Florida the very first step in eviction for nonpayment of rent is posting or delivering the three day notice to pay or quit.

I know, it may sound mean, terrible, and predatory to evict someone at all, especially over the Christmas holidays. The Boston landlady had not received any rent for nearly a full month before she called me. The tenant fell two months behind shortly after receiving the three day. So, the Boston landlady was out nearly $2000. during her Christmas holidays. Now who's mean, terrible and predatory?

Granted, being a landlord is not for the fainthearted. An ex of mine, now a dim memory from the distant past, thought he wanted to be a landlord. This was during the glory days of the last real estate boom. He bought a house as an investment, fixed it up, and rented it out. The only problem – the tenants paid a partial damage deposit and one month's rent, and then never paid another dime. The tenants tenanted the house for a good three months – two of which were free, since they simply didn't pay.

The ex became increasingly angry and frustrated four and more days after he posted the three day, and there were no signs the tenants were going anywhere. Late one night he went there, stood at the road, and threw rocks at the house. I wasn't there, I don't know how many he threw. I know he broke at least one window. When he got back and told me what he had done, after a melt down, telling him he not only could have hurt someone, but he could also be in jail, and probably should be – I told the ex that he was to never ever go near that house again. Although it was technically his house, I didn't care. He was not cut out for landlord life. The moral of the story, is that being a landlord is not for everyone.

We, at the Florida Association of Legal Document Preparers, http://www.faldp.org have recently launched a statewide eviction service. We know it can be tough. We know that it is difficult to hang on to property these days. We know that finding good tenants is harder than ever. We're hoping that our service will take a little pressure off. Please visit our page http://www.faldp.org/Florida-Eviction-Network.html and see how we can help.

We have absolutely nothing against tenants, in fact, we love them (most of the time ... well ... sometimes). They are the lovely people that pay rent so we landlords can pay the mortgage payment. And, by the way, my definition of a good tenant, is a tenant that pays in full and on time and doesn't tear things up.