Written by South Carolina Foreclosure Defense Attorney Kristina G. Pierce
The Protecting Tenants at Foreclosure Act (“PTFA”), which is in effect from May 2009 through December 31, 2014 (thanks to the Dodd Frank Act), protects tenants living in homes that are facing foreclosure in South Carolina and throughout the U.S. The PTFA applies to any “immediate successor in interest” of a foreclosed property, which includes a bank that takes the title to a property after a foreclosure has been completed. Pursuant to the PTFA, the new owner of the house assumes the ownership interest of the previous owner, subject to the rights of “any bona fide tenant.” In addition, the PFTA provides that the new owner of the foreclosed property must comply with certain notice requirements by the Act, including notices to any current bona fide tenants.
So DON’T FREAK OUT! It is easier to make a plan and deal with the situation if you know the timeline you are working with.
A tenancy is “bona fide” 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 product of a regular arm’s-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market value, or the rent is reduced or subsidized due to a government program.
The new property owner must provide current tenants with a notice to vacate at least 90 days before the effective date of such notice. Meaning at a minimum, after the property is transferred to a new owner, a bona fide tenant is entitled to a 90-day notice before they can be required to vacate the property.
In addition, if a current tenant has a valid lease, the PTFA permits the tenant to continue to reside in the house until the end of their lease period, unless: (1) the tenant does not have a lease and is month-to-month, or the lease is “terminable at will” under state law, meaning the lease is not set for a specific period of time, or (2) the property is sold after a foreclosure action to a purchaser who will occupy the property as their primary residence. Even if these exceptions apply, the tenant is still entitled to the minimum 90-day notice before the tenant is are required to move.
If you are still unsure about your specific rights, contact an attorney for help. For more information on tenant’s rights in foreclosure, click here.