Rental Homes in Georgia Facing Foreclosure
Practicing bankruptcy law in Atlanta, Georgia my office gets a call on this topic at least once a week from both tenants and landlords in Georgia. In this still chaotic housing market many renters are finding themselves living in now foreclosed homes. What do they do? Do they have to leave immediately or is their contract honored?
Luckily if you are renting a property that is foreclosed upon you do have rights (At least for the time being)! The Protecting Tenants at Foreclosure Act (PTFA), enacted on May 20th, 2009, provides renters federal protections when landlords lose rental properties to foreclosure. Prior to this, renters in Georgia had their leases extinguished at foreclosure, and thus had limited rights relative to evictions initiated by succeeding property owners.
Protections for Georgia Renters
Under PTFA, tenants living in foreclosed rental units must be given a minimum 90-day pre-eviction notice by the entity that takes clear legal title after foreclosure. This covers renters with “month-to-month” leases, renters with leases terminable at-will, and even renters without formal leases. However, if the tenant has more than 90 days left on the lease, the tenant must be allowed to stay until the lease ends, except if the new owner will occupy the property as a primary residence.
Limitations on Georgia Renters
The law applies to leases entered into BEFORE foreclosure.
The law limits protections to “bona fide” leases. A lease is bona fide when:
the tenant is not the mortgagor, the mortgagor’s child, spouse, or parent;
the lease is the result of an arms-length transaction, and
the rent due under the lease is not substantially less than market rent, unless then rent is reduced by a subsidy.
This law protects tenants from eviction because of foreclosure on the properties they occupy. This law was scheduled to expire on December 31, 2012. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) changed the expiration date to December 31, 2014.
If you are either facing a foreclosure on a rental property or if you currently reside in a home which you are renting that is facing foreclosure you may want to consult with an attorney to ensure that your rights are protected and any possible liability is removed.