You Purchased a Property at Foreclosure and there is a Tenant in it. Now What?

So, you have bought a property in foreclosure and you find there is a tenant living there that you would prefer did not live there. Maybe you didn't do as much due diligence on the property as you should have, or maybe the tenant is paying under market value for the property. Whatever the reason you want him, her or them out.

The rules governing what you need to do to remove this tenant changed last year under the The Protecting Tenants at Foreclosure Act of 2009 (PTFA), part of the Helping Families Save Their Homes Act of 2009 (Public Law 111-22, approved May 20, 2009).

Does the PTFA affect all residential rental property?

The act applies to "a federally-related mortgage loan or any dwelling or residential real property after the date of enactment of this title. . ."

Does it affect all tenants?

Only "bona fide" tenants are protected by the PTFA. A bona fide tenant:
a) has a lease that was entered into before the Notice of Foreclosure;
b) who is not the mortgagor, their child, spouse or parent;
c) whose lease was an arm's length transaction; and
d) has a lease that is not substantially less than fair market value.

So it affects most properties and most tenants, what do I have to do to comply?

If new owner does not intend to personally occupy the dwelling, he may give the tenant 90 days written notice to quit the property, unless the tenant is under a lease that does not expire within 90 days from the notice, then the tenant is entitled to remain through the end of their lease.

If the new owner intends to occupy the rental unit, then it does not matter whether there is an unexpired lease term. The new owner must simply terminate the lease immediately and give the tenant 90 days written notice to vacate.

What if the tenant doesn't vacate?
If the tenant does not vacate at the expiration of the 90 days you will need to file a summary ejectment action just as you would for any tenant holdover. The landlord should be able to sue the tenant for rent during the time that you held the property, but that is a topic for another post.

Additionally, the act was scheduled to sunset on December 31, 2012, but was extended 2 years to December 31, 2014 by the Dodd-Frank Wall Street Reform and Consumer Protection Act.