By Kent Qian
Last week, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203). The Act is most known for reforming the financial system and creating an independent consumer protection agency. But more importantly for renters, Section 1484 of the Act extends the Protecting Tenants at Foreclosure Act (PTFA) to 2014 and clarifies that the PTFA protects all bona fide tenants who entered into a lease before the transfer of title by foreclosure.
Under the PTFA, all bona fide tenants must receive a 90-day notice before they may be required to vacate. Tenants with more than 90 days remaining on a lease may remain until the end of the lease, if the tenant entered into the lease before the "notice of foreclosure." Initially, the term "notice of foreclosure" was not defined in the PTFA. Seizing on this ambiguity, banks and other post-foreclosure owners have insisted that "notice of foreclosure" means one of the earlier foreclosure notices, such as a notice of default sent to a defaulting borrower in California. Tenant advocates, on the other hand, argued that the PTFA's legislative history evidenced Congressional intent to protect all leases entered into before the transfer of title by foreclosure. Until now, the case law on what "notice of foreclosure" means has been mixed.
The Dodd-Frank Act removes this ambiguity by defining the date of "notice of foreclosure" to be the date complete title transfers through foreclosure. Because it is meant as a clarification of existing law, this provision should apply retroactively to pending evictions to ensure that bona fide tenants may remain until the end of any lease entered into with a landlord who still owned the property at the time.
Kent Qian is a Skadden Fellow at the National Housing Law Project. His work at NHLP focuses on protecting renters' rights in foreclosure.