Tenant Rights in Foreclosed Properties:
The 2010 Post-Foreclosure “Just Cause” Eviction Law
In December 2010, CRC staff attended a presentation on new state and federal legislation that offers protections to tenants in foreclosed properties. The following article summarizes Section 6 of the new law, and includes advocacy tips for those working with individuals impacted by a foreclosure.
The Massachusetts “Act Relative to Mortgage Foreclosures” was signed into law as Massachusetts General Law Chapter 186A on August 7, 2010. The new law allows most tenants in foreclosed rental properties who pay rent and comply with tenancy obligations to remain in their homes until there is a binding purchase and sale agreement on the property.
The Post-Foreclosure “Just Cause” Eviction Law recognizes that foreclosing banks have evicted thousands of renters in Massachusetts. Main points of the new law include:
- Prohibits foreclosing banks and similar mortgage holding entities or “foreclosing owners”, from evicting “bona fide” tenants unless there is “just cause” or a binding purchase and sale agreement.
- Requires foreclosing owners to give tenants written notice with contact information for the foreclosing owner and the person responsible for management and maintenance.
- Requires other notices before a foreclosing owner can evict.
Which Tenants are protected?
Alltenants residing in a bank-owned property are entitled to contact information notices from the foreclosing owner.
“Bona fide” tenants is defined as those who have entered into a lease or tenancy through an “arm’s length” transaction with the former owner or landlord—meaning the tenant cannot have been the parent, child, or spouse of the apartment lesser, and tenants must have moved in prior to the foreclosure. Most “bona fide” tenants have the additional protection from eviction unless there is just cause or a purchase and sale agreement.
A small number of “bona fide” tenants, those who live in properties purchased by an individual or investor rather than a bank/mortgage company, are not protected by the new just cause eviction law. According to Judith Liben of Mass Law Reform Institute, 80-90% of foreclosed buildings go directly back to the bank, so most tenants should be covered by the law.
Details of Notice Requirements
Foreclosing owners are required within 30 days to provide all tenants living in foreclosed properties with contact information for the foreclosing owner, repairs and management, and the address where rent should be sent. This information must be delivered to tenants through public postings, mail, and also notices slid under the door of each unit. Foreclosing owners can be sanctioned $5,000 for failing to comply with these procedures.
Evictions & “Just Cause”
Under this new foreclosure law, there are only six “just cause” reasons for eviction. These include:
- Non-payment of rent
- Material violation of an obligation of the tenancy;
- Refusal of written request to renew/extend lease with the foreclosing owner;
- Creating or allowing a nuisance in the unit, damaging the unit, or disturbing other occupants;
- Illegal activity in the unit;
- Refusal to allow the foreclosing owner reasonable access to inspect, repair or show unit to prospective purchaser.
No matter what a tenant’s status, individuals have the right to a court hearing prior to eviction. Under no circumstances can a post-foreclosure owner force a tenant to leave without a court order.
More information
See: http://www.malegislature.gov/Laws/SessionLaws/Acts/2010/Chapter258 or www.masslegalservices.org/Tenant-Rights-After-Foreclosure
For advocacy issues contact:
Judith Liben
Senior Housing Attorney
Mass. Law Reform Institute
617-357-0700 x327
jliben@mlri.org
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