Laws on Tenants Rights maintain protection for renters in an Arizona Foreclosure
If you are a tenant in a property that is on the verge of foreclosing, there’s no need to panic – the federal law is on your side and has laws for tenants rights.
Many tenants are often stuck in a sticky situation when a landlord is forced to go into foreclosure. Pieces of paper posted to your garage or front door informing you that a foreclosure will be taking place on the property can cause you to immediately panic. But, because you are not the homeowner, the matter is out of your control.
That is a stomach-churning thought considering you may be out of a home and there is nothing you can do about it, but it’s important to understand your rights of a tenant in foreclosure and role in the matter in order to carefully plan for your future in this undesirable situation.
The good news is that any lease that is signed before a foreclosure is initiated must be honored, and any tenant under that lease must be protected during the length of the lease. This means that regardless of how long the foreclosure takes, you will be able to continue living in the building as normal, whether the remainder of your lease is two months or 10 months.
The law protecting tenants during and after a foreclosure has changed recently. Previous laws required tenants to sign their lease at least 90 days prior to the foreclosure auction in order to be protected, but that is no longer the case. Now tenants can sign a lease contract any time before the auction – even days, if it comes down to that – and still get full protection under Arizona foreclosure laws.
Additionally, you will most likely have to continue paying rent, even though the landlord has stopped making the mortgage payments. This is because there are two unique contracts in play – one is between the landlord and the lender, which is ceased while the foreclosure is occurring, and the other is between you and the landlord, which is completely separate from the mortgage contract and will still need to be upheld with the original terms in place.
Even so, this will give you plenty of time to think about your future – knowing the property will be foreclosed allows you to find a new home or work out a new contract with the landlord before the foreclosure auction occurs. The best thing to do is to discuss the situation with your landlord to figure out your contractual obligations and decide upon the best route moving forward but also be educated on rights of a tenant in foreclosure.
Protecting Tenants at Foreclosure Act (PTFA) of 2009
This act does of course have exclusions, and state laws are still in place, including AZ tenant rights.
But, the Act does provide the listed benefits:
1) Tenants that have a valid month to month agreement can stay up to 3 months from the date the new owner takes ownerships (meaning, when the title transfer occurs).
2) If the property forecloses and when title transfers, leasees can still rent out the home for the term of their lease. This, however, is changed if the new owner plans on living in the property, wherein the existing tenants only have 90 days from the date the ownership changed to move.
3) This act doesn’t protect tenants who aren’t current, have fraudulent leases, or those that put together a lease after the foreclosure took place.
Again, there are state to state differences so as a tenant, your best bet is to continue to make payments to the current owner until otherwise officially notified. Keep a record of all conversations and mailings, etc, and if in doubt, there are resources AZ tenant rights that can help guide you in the right direction.
*Please note, none of this is to be taken as legal advice; I am not an attorney. I have no affiliation to the following law offices and you are encouraged to do your own due diligence.
Protecting Tenants At Foreclosure Act of 2009
Arizona Tenants Claims Against a Landlord when a home is lost in Foreclosure
What you need to know about the “Protecting Tenants at Foreclosure Act” for Arizona
Tracy (G+) is an Arizona Short Sale Realtor, Investor, Rehabber, and Foreclosure Expert.
She also is an avid blogger, vlogger, contributor to the Bigger Pockets Blog, and consultant on all things Arizona Foreclosures.