Condo Association Lawyers

Condo Association Lawyers
Austin Condo Lawyers

Friday, September 9, 2011

What Happens to Tenants in Texas When a Property is Sold at Foreclosure Auction?

The Protecting Tenants at Foreclosure Act of 2009 (“PTFA”) is a section of what is popularly called the Helping Families Save their Homes Act of 2009. Specifically, PTFA ensures that tenants who are losing their residence to foreclosure will have a sufficient period of time before being forced to leave their home. If the tenant is living at their home either without a lease or with a lease terminable at will, the immediate successor in interest (the person or entity taking over the property post-foreclosure) must give the tenant at least 90 days notice to vacate the property. If the tenant does have a bona fide lease, the immediate successor in interest must recognize the terms of the original lease. In this case, the tenant cannot be forced out of the property until the original lease expires. If the purchaser is going to use the property as his primary residence, however, the lease can be terminated with a 90-day notice period. These notice periods are designed to be the federal minimum, so they do not trump state laws that provide more time for tenants to vacate the property.

This could affect both Texas property owners associations and Texas property owners in undesirable ways. Most of the time, if there is a property owners association in place, the tenant is going to have a bona fide lease because the POA is generally not going to allow residential leases without written agreement. As a result, it is going to be difficult for the Texas POA to remove a tenant when an owner is not paying his POA dues. Even if foreclosure on the property occurs, it will, at a minimum, be three months before the tenant can be removed. This could mean that the POA will have to go even longer without receiving dues from one of the properties it governs. The Protecting Tenants at Foreclosure Act of 2009 is scheduled to sunset on December 31, 2012.