Law Office of Hayes & Welsh

Restoration of The Protecting Tenants at Foreclosure Act

Rocky View.jpgAnyone who was involved in the post-foreclosure eviction world in the last decade will certainly recall the 2009 Protecting Tenants at Foreclosure Act ("PTFA").  That measure, part of the larger Dodd-Frank reform laws, added significant "protections" for unwitting tenants who were caught up in situations where the home they were leasing or occupying was subject to foreclosure during their tenancy.  Whereas, prior to 2009, many state laws only required relatively short notice periods before the purchaser at the foreclosure sale could file an action for unlawful detainer (eviction), the PTFA granted any "bona fide tenants" a minimum of 90 days notice before an unlawful detainer complaint could be filed.  The PTFA also afforded additional time to bona fide tenants pursuant to a "bona fide lease" entered into prior to a "notice of foreclosure."  Those tenants in possession pursuant to a bona fide lease could remain in the leasehold until their bona fide lease expired.  Those provisions, with their attendant ambiguities, slowed many post foreclosure possession actions and made verification of "bona fides" a constant part of any servicer, purchaser or attorney's work.  They also engendered substantial litigation trying to fill in the contours of those ambiguities.  

By its own terms, the PTFA expired on December 31, 2014.  However, between 2009 and 2014 many state legislatures passed their own versions of the PTFA or altered timelines for post-foreclosure remedies where tenants possessed the properties.  Most people associated with the foreclosure industry (including those working on the consumer side) thought that those state laws would be the new controlling laws on the issue.  They were recently proven wrong.  As of June 23, 2018 the PTFA is back and it is now permanent legislation (with no sunset provision).

On May 24, 2018 (effective date June  23, 2018), President Trump signed the The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155),  which, among many other things, restored the PTFA and any previously promulgated regulations adopted in relation to it (the provisions and regulations related to Section 8 tenancies were likewise restored).  The sunset provision of the PTFA was stricken.  

What does this mean for post-foreclosure evictions?  Distressed property purchasers, servicer and attorneys will now need to reacquaint themselves with any case law on what constitutes a bona fide tenant, a bona fide lease, the term "not significantly less than fair market value" and "notice of foreclosure" (e.g., When does that occur?  Is it the Notice of Default?  The Notice of Sale? The date of the actual sale?) and etc.  In Nevada, legislative changes made during the financial crisis extended notice times and other protections to tenants, however any of those provisions that are "less protective" than the PTFA are preempted by the federal law.   

The various impacts of the return of the PTFA are likely to be longer average times for actions for possession, renewed interest in longer-term leases by defaulting homeowners and their would-be lessees, increases in the amount of money requested for relocation assistance, etc.  For the unwary, these changes could stall or significantly delay an eviction where the notice is faulty or an action is filed improperly.  Purchasers and servicers would be well advised to consult an attorney who is knowledgeable and experienced in this area. 

Martin Welsh and the Law Office of Hayes & Welsh have handled post-foreclosure evictions in Nevada since 2007.  We stand ready to assist you with any eviction/unlawful detainer matters that you might have (including compliance with the PTFA).  As a commercial litigation and creditor's rights law firm, we can also assist with commercial collections, replevin actions and many other areas of litigation.  Please feel free to contact us at your convenience.

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Law Office of Hayes & Welsh

Law Office of Hayes & Welsh
199 North Arroyo Grande Blvd
Suite 200
Henderson, NV 89074

Phone: 702-434-3444
Fax: 702-434-3739

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