Obama Signs Law to Protect Tenants after Foreclosure

Thursday, May 21, 2009
Tenants Together

A new law passed by Congress and signed yesterday by President Obama provides protections for tenants whose landlords fall into foreclosure. Under the Helping Families Save Their Homes Act, tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease, with limited exceptions. The bill also provides similar protections to housing voucher holders. The protections go into effect immediately and expire at the end of 2012.

This is an important victory for tenants around the country. In many states, tenants receive little or no notice prior to foreclosure eviction. Now most will receive 90 days notice.

In California, most tenants are entitled to 60-days notice of eviction after foreclosure under a law passed in 2008. The new federal law increases this to 90 days.

California law also provides that leases are extinguished by foreclosure, with limited exceptions. Many tenants enter into one year leases, only to find a few weeks or months later that the property is heading for foreclosure and that their leases will be extinguished. The new federal law provides that the lease survives the foreclosure, except that the lease can be prematurely terminated and the tenant given 90-day notice where a purchaser seeks to occupy the premises.

Some California cities have local laws prohibiting foreclosure evictions. The new federal protections do not preempt these laws which remain in full force.

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