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Answer: In May 2009, Congress passed the Protecting Tenants at Foreclosure Act, Public Law 111-22. This law provided important new protections for tenants when their rental property is sold at foreclosure.
Tenants in foreclosed properties must be given at least 90 days’ written notice to vacate by the new owner, and if a tenant has a valid lease, the new owner must honor the term of that lease unless the owner intends to personally occupy the property. Where the new owner intends to occupy, the tenant is still entitled to a 90-day notice.
To fall under these protections, however, the tenant must be “bona fide.” The rental agreement must be at the fair market value for the property and it must be the result of an “arms length” transaction. There should be documented evidence that rent was paid, for example by means of canceled checks.
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