90 Day Eviction Notice to Tenants of Foreclosed Residential Properties

NEW FEDERAL LAW:

An increasing reality in today’s economy is that tenants of residential foreclosed properties are finding themselves being evicted overnight from their homes immediately after the completion of foreclosures, often losing rental and security deposits in the process.

On May 20, 2009, a new federal law was enacted: Helping Families Save Their Homes Act of 2009 (Public Law 111-22). It is designed to limit the harm suffered by tenants of foreclosed properties by essentially requiring at least 90 days notice be given to tenants before eviction in certain situations, or allowing tenants to finish their lease terms in other instances.

HOW DOES THIS IMPACT THE TITLE AGENT?
Make an Exception for the Tenant’s Rights: When insuring an REO or foreclosed residential property which is currently under a written or oral rental agreement (or even a tenant at sufferance), an exception for the rights of the tenant should be included in the commitment and policy.

Suggested exception language:

Rights of tenants in possession under unrecorded leases.

How Does the Title Agent Determine if an Exception is Needed?

The seller’s title affidavit should be carefully reviewed to see if it discloses the existence of tenants or contains language suggesting that the affiant does not really know if there are tenants. Typically, the person signing the affidavit for the lender/seller will not have personal knowledge of conditions of the property. Frequently, the affidavit will state that it is made “upon information and belief”. In such circumstances, the title agent should obtain a supplemental affidavit from the buyer which states that the buyer has inspected the property and specifies whether there are parties in possession. If there are parties in possession or the title agent cannot obtain an acceptable affidavit, an exception must be made for the right of the tenants.

As posted by our underwriter: Fidelity National Title