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Post-Foreclosure Evictions

As is common today, thousands of homes that are being foreclosed are occupied by renters. Investors who buy these homes at the foreclosure auction generally only have one objective: to flip the property and make a quick profit. If a renter is occupying the property when the investor purchases the property at the foreclosure auction, this scenario can throw a serious wrench into the investor’s plans. Often the investor or new homeowner will aggressively try to get the renter to move out voluntarily even though the renter does not want to leave.


If the home you are leasing is foreclosed and you have a “bona fide” lease and you want to stay in the home, your leasehold interest in the property is protected in most cases.

On May 20, 2009 a new federal law went into effect entitled the “Protecting Tenants at Foreclosure Act of 2009.” A copy of the text of this law can be found here.

What this law states is that if you have a “bona fide” lease, the new property owner after a foreclosure cannot terminate your tenancy before your lease expires, unless he or she intends to live in the property as his or her primary residence. Even still, if the purchaser of the property intends to live in the home as his or her primary residence, the new owner must still provide you with at least 90 days notice before you are evicted.

The key to the Protecting Tenants at Foreclosure Act is that you must have a “bona fide” lease. To be considered a bona fide lease, three requirement must be satisfied:

(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length transaction; and
(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a federal, state, or local subsidy.

Stated differently, the major provisions of the Protecting Tenants at Foreclosure Act are as follows:

  • During the term of the lease, the tenant has a right to remain in the unit and cannot be evicted, except for actions that constitute good cause.
  • If the lease ends in less than 90 days, the new owner may not evict the tenant without giving the tenant at a minimum 90 days notice.
  • At the end of the term of the lease, the new owner may terminate the tenancy if the new owner provides a 90-day notice.
  • The new owner may terminate the tenancy if the owner will occupy the unit as a primary residence, and has provided the tenant a notice to vacate at least 90 days before the effective date of such notice. This is the only exception to the rule that the tenant may not be evicted during the term of the lease.


If the Protecting Tenants at Foreclosure Act does not specifically protec you for the duration of your lease term – for example, the new property owner intends to live in the home as his primary residence – you may be evicted after 90 days notice. If, in fact, you are evicted after the 90-day notice, you may still have remedies against the original landlord.

First, you would likely be able to seek damages for the original landlord’s likely breach of your lease agreement. Damages would likely include your out-of-pocket costs incurred to move, the unreimbursed security deposit and/or any other refundable deposits, and any other out-of-pockets costs incurred as a result of having to move before the lease was up. Also, because this would essentially be a breach of contract lawsuit against the original landlord, you could ask the court that you be awarded your attorney’s fees and costs pursuant to Arizona statute.


If the home you are renting has been foreclosed and the new owner is trying to evict you, there is a strong possibility that the Protecting Tenants at Foreclosure Act of 2009 protects your right to stay in the home for the remaining term of your lease.

If the new owner is getting aggressive with you in trying to get you to move out, please give us a call to discuss your rights and remedies.


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