TENANT PROTECTION ACT PASSED
A new law was recently passed that affects rental property owners who may face foreclosure, as well as individuals purchasing a foreclosed property. Sen. Lena Taylor's bill, the "Tenant Protection Act" (SB 78), was incorporated into the recently passed budget repair bill.
The new law requires that the property owner notify any prospective tenant in writing that (a) a foreclosure action has been commenced, and (b) if a judgment for foreclosure has already been entered, the date when the redemption period expires. Further, any rental agreement entered into while a foreclosure action is pending must include a separate written statement, signed by the tenant, stating that the owner provided the above notice to the new tenant. The tenant may void the rental agreement if it does not include the written statement.
For current tenants, the new law requires the plaintiff in the foreclosure action (typically a financial institution) to give tenants several notices advising them of the status of the foreclosure action. Failure to provide the notices allows the tenant to recover $250 in damages plus reasonable attorney's fees.
Also under the new law, if a tenancy is terminated as a result of a foreclosure judgment, the tenant may retain possession of the unit for up to 2 months after the end of the month in which the sale of the property is confirmed (but the tenant must pay rent during this period at the same rate that was applicable prior to the confirmation). The tenant may also withhold rent equal to the security deposit during the last month of possession. Furthermore, no eviction judgment to remove a tenant whose tenancy was terminated as a result of a foreclosure judgment may be executed before the end of the second month after the foreclosure sale was confirmed.
Finally, if an eviction action was commenced against a tenant and their removal from the rental property was due to a mortgage foreclosure, then no information regarding that eviction can be included on CCAP.
The newly enacted law can be viewed here (it starts on page 108)
