State and Federal Laws
Affecting Subsidized Tenants in
Foreclosed Properties
1
Massachusetts Law Reform Institute
99 Chauncy Street, Suite 500, Boston, MA 02111-1703
PHONE 617-357-0700 ▪ FAX 617-357-0777 ▪ www.mlri.org
September 29, 2010
1
Laws in a Nutshell

(Federal) Protecting Tenants at Foreclosure Act of
2009 (“PTFA”) (expires December 31, 2014) 2 3





(Massachusetts) G.L. c. 186A (2010) (“postforeclosure just cause eviction law”)



Requires minimum 90 days notice to terminate tenancies after foreclosure.
Unexpired leases survive foreclosure unless new owner sells to person that will
occupy unit.
New owner assumes HCV lease & HAP contract.
New owner’s desire to have unit vacant is not “other good cause” for
termination of HCV lease or HAP contract under 24 CFR §982.310.
Requires banks and related entities (“banks”) to notify tenants of new ownership
and management after foreclosure.
Prohibits banks from evicting tenants in foreclosed properties without “just
cause”, or unless there is a binding P & S agreement, and without complying
with certain notification provisions.
(Massachusetts) G.L. c. 186, §§13 & 13A (2007)

Deals with the effects of foreclosure on different types of tenancies and provides
that subsidized leases and contracts survive foreclosure.
2
The New Just Cause Eviction Law (c.
186A)
The new post-foreclosure just cause
eviction law (G.L. c. 186A)4:

Prohibits foreclosing banks from evicting “bona
fide” tenants without “just cause” or a binding
purchase and sale agreement.

Requires banks to give tenants written notice
with contact information for the bank and the
person responsible for management and
maintenance.
3
C. 186A: Which tenants in foreclosed
“bank owned” properties are protected?

All tenants in bank owned properties are entitled
to contact information notices.

“Bona fide” tenants can’t be evicted unless there
is just cause or unit is under binding contract for
sale to a third-party.

Tenants in properties purchased at foreclosure
sale by private investors or individuals are not
protected by this law.5
4
C. 186A: What notices must a foreclosing
owner provide to tenants after foreclosure?

A foreclosing owner must provide written contact
information notice including:

Name, address, and telephone of the
foreclosing owner.

Name, address, telephone of the person
responsible for repairs/management.

Address where rent should be sent.6
5
C. 186A: When must the contact
information notice be provided?

Contact information notice must be provided
within 30 days of the foreclosure.
6
C. 186A: How must the contact information
notice be delivered to tenants?

Foreclosing bank must:

Post notice in prominent location in the
building.

Mail notice to each unit.

Slide notice under the door to each unit.
(foreclosing bank must do all three)
7
C. 186A: When can “bona fide” tenants
be evicted by a foreclosing bank?
A foreclosing bank can evict a “bona fide” tenant
under only two circumstances:

If there is “just cause” (nonpayment or
various tenancy violations).

If there is a purchase and sale agreement
with a third party.7
8
C. 186A: Who is a “bona fide” tenant?

Not the parent, child, or spouse of former
owner (the person who took out the
mortgage).

Must have entered into lease/tenancy through
an “arms length” transaction.

Persons with rental subsidies will generally
qualify.

A lease is not required – “tenants at will” of
former owner can be “bona fide” tenants.8
9
C. 186A: What is an “eviction” for which
foreclosing bank needs just cause?
“Eviction” is defined VERY broadly as . . .

“An action without limitation . . . which is
intended to actually or constructively evict a
tenant or otherwise compel a tenant to
vacate…”9
10
C. 186A: Examples of “Eviction”

Serving a notice to quit or court complaint.

Refusing to repair so that the tenants are
forced to leave because of substandard or
dangerous conditions.

Offering “cash for keys” without telling tenants
they cannot be evicted except for just cause.

Telling tenants they must leave because of the
foreclosure.
11
C. 186A: What constitutes “just cause” to
evict?
There are six “just cause” reasons for eviction:


Non-payment of rent (or use and occupancy).

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 to prospective
purchaser.10
12
C. 186A: Non-payment as “just cause” to evict
Foreclosing bank can evict for non-payment only
if:

It notified tenant in writing of the amount of rent
(should generally be same as before foreclosure).

30 days have passed since contact information
notice was posted and delivered.

It delivered to the tenant, at the same time as the
contact information notice, written notice of tenant’s
right to a court hearing before eviction.
13
C. 186A: Material violation of the tenancy as
“just cause” to evict
A foreclosing bank can only evict for a material
violation of an obligation of the tenancy if:

30 days have passed since contact information notice
posted and delivered.

It delivered to the tenant, at the same time as the contact
information notice, a written notice of tenant’s right to a
court hearing before eviction.

It delivered written notice of the alleged material violation.

30 days passed since the notice of the violation was
received and tenant has not cured the violation.
14
C. 186A: Refusing to extend or renew lease or
tenancy agreement as “just cause” to evict
A foreclosing bank can evict for tenant’s refusal
to extend/renew lease or tenancy agreement if:

Lease or tenancy agreement with former owner expired
after August 9th 2010.

Bank requested in writing that tenant extend/renew
lease or tenancy agreement.

30 days passed since contact information notice was
posted and delivered.

Bank delivered to the tenant, at the same time as the
contact information notice, a written notice of tenant’s
right to a court hearing before eviction.
15
C. 186A: Other “just cause” to evict
Foreclosing bank can also evict for the following
reasons but only if it delivered the contact
information notice and, at the same time, a
written notice of tenant’s right to a court hearing
before eviction

Creating nuisance in unit, causing
substantial damage, or disturbing other
occupants.

Illegal activity in the unit.

Refusing reasonable access for repairs or to
show unit.
16
C. 186A: What if the foreclosing bank does not
provide the contact information notice?

Foreclosing bank cannot evict for “just cause”
if contact information notice has not been
posted and delivered.

Foreclosing bank may be fined $5,000 per
“eviction” that violates the new law, or be held
liable for damages under other laws.11
17
C. 186A: What if an investor or individual,
not a bank, buys at foreclosure?

Tenants in properties purchased by individual or
investor not in the mortgage business are not
protected by new just cause eviction law.

These tenants are protected by the federal
“Protecting Tenants at Foreclosure Act of 2009”
(“PTFA”), §702 and may finish term of their
leases or are entitled to at least 90 day notice to
quit.12

After PTFA expires 12/31/14, tenants will still be
protected by c. 186, §§13 & 13A and subsidized
leases will continue to survive foreclosure.
18
What other protections do tenants in
foreclosed properties have?

All post-foreclosure owners must maintain the
property up to standards of the State Sanitary
Code.13

No matter what their status, tenants have the
right to a court hearing prior to being put out.
Under no circumstances can a post-foreclosure
owner force a tenant to leave without a court
order.14
19
How do these 3 laws affect HCV
tenancies after foreclosure? (overview)

C. 186A - Protections and obligations apply to all bona fide
tenants, including those with state and federal subsidies,
when “banks” purchase at foreclosure. No matter what the
status of HCV lease, banks cannot evict without just cause
or existence of a binding P & S agreement.

PTFA - Applies even if someone not in the mortgage
business buys at foreclosure. Subsidized leases survive
foreclosure and simply wanting property vacant is not
“other good cause” for lease termination under 24 CFR
§982.310 (unless owner sells to third party who intends to
move in).15

G.L. c. 186, §13A – Provides that subsidized leases
survive foreclosure.
20
What are the rights of a tenant with HCV
lease if no foreclosure involved?
The new laws only apply to tenants in properties that have
not gone through foreclosure. Standard HCV rules apply:

Owner may only terminate lease in first year for tenant
fault that breaches lease.

Owner not obligated to renew lease and may decline to
do so without any reason or tenant fault depending on
actual termination provisions in lease.

Owner can terminate mid-lease after initial lease term
for “good cause” including business reasons depending
on actual termination provisions in lease.
21
What are the rights of a bona fide tenant with
HCV lease when there is a foreclosure?
But if there is a foreclosure, the rules are different:

Whoever buys at foreclosure (bank, investor, individual) must
assume existing HCV lease and HAP contract (G.L. c.186,
§13A; PTFA, §703).

If post-foreclosure owner is a “bank”, must also deliver and
post contact notices 30 days after foreclosure. (c. 186A).

If post-foreclosure owner is a “bank”, even after initial lease
term, can’t terminate lease unless there is just cause or a
binding purchase and sale agreement. (c. 186A).

Unclear if under c. 186A bank must renew the HCV lease and if
refusal to renew would be an illegal “eviction” under c. 186A.
22
Case #1: Bona fide tenant has 9 months left on first
year of HCVP lease - property foreclosed and
purchased by bank or similar entity
Bank must assume lease and HAP contract
(G.L. c. 186, §13A and PTFA, §702).
 Bank can’t evict except for tenant fault.
(c. 186A and 24 CFR §982.310(d)(2)).
 Bank must post contact information notice
within 30 days of foreclosure (c. 186A).

23
Case #2: Bona fide tenant has 9 months left on first
year of HCVP lease - property foreclosed and
purchased by private individual or investor

New owner assumes lease and HAP contract
(PTFA, §702 and G.L. c. 186, §13A).

New owner can only evict during initial term for
tenant fault (24 CFR §982.310(d)(2)).

Even if new owner doesn’t renew HCV lease,
must give at least 90 day notice (PTFA, §702).
24
Case #3: Bona fide tenant is in second year of HCVP
lease (subsequent to initial lease term) – property
foreclosed and purchased by bank or similar entity

Bank assumes lease and HAP contract (c. 186, §13A and
PTFA, §702).

Bank can only “evict” for just cause or if there is a binding
purchase and sale agreement (c. 186A).

Bank’s desire to have property vacant is not “other good
cause” to terminate lease (24 CFR §982.310(d) & PTFA,
§703).

Bank must post contact information notice within 30 days
of foreclosure (c. 186A).

Unclear if a refusal to renew lease at expiration would
constitute an illegal “eviction” (c. 186A).
25
Case #4: Bona fide tenant is in second year of HCVP lease
(subsequent to initial lease term) – property foreclosed and
purchased by private individual or investor

New owner assumes lease and HAP contract (GL.
C. 186, §13A and PTFA, §702).

New owner can refuse to renew when lease
expires (HCV rules).

New owner can terminate lease for “other good
cause” in accordance with 24 CFR §982.310, but:



new owner’s desire to have the property vacant does not
constitute “other good cause.”
new owner can terminate lease if he or she sells to a
party who intends to move into the unit (PTFA, §703).
90 day notice provision applies (PTFA, §702).
26
Where can I find more information
concerning these laws?
The full text of the new “just cause” eviction law, G.L. c. 186A is at:
http://www.malegislature.gov/Laws/SessionLaws/Acts/2010/Chapter258
Summary of GL c.186A, and other laws on rights of tenants in foreclosed
properties, can be found at:
www.masslegalservices.org/Tenant-Rights-After-Foreclosure
Additional information on PTFA can be found at:
www.nlihc.org/template/page.cfm?id=265
For more information contact:
Judith Liben
Senior Housing Attorney
Mass. Law Reform Institute
99 Chauncy St. Boston, MA 02111
617-357-0700 X327
jliben@mlri.org
27
Endnotes
1
2
3
4
5
6
7
8
9
This presentation was prepared by MLRI Senior Housing Attorney Judith Liben and
Jacob Taylor, Northeastern Legal Fellow.
Protecting Tenants at Foreclosure Act of 2009, 12 U.S.C. § 5220 note; Pub. L. No.
111-22, tit. VII, 123 Stat. 1632, 1660-62 (2009)(as amended by Pub. L. No. 111203, tit. XIV, § 1484 (2010)).
HCV regulations have not yet been amended to reflect the statutory changes made
by PTFA. HUD has, however, implemented the changes through notices. See HUD
Notices PIH 2009-52(HA) (Dec. 15, 2009) & PIH 2009-17(FR) (June 18, 2009),
both are available at:
http://www.hud.gov/offices/pih/publications/notices/2009.cfm
As of September 13, 2010 this law is not yet posted as G.L. c. 186A on the
mass.gov website or Westlaw. The session law is called “An Act Relative to
Mortgage Foreclosures”, St. 2010, c. 258 (August 7, 2010). Full text of law may be
found at http://www.malegislature.gov/Laws/SessionLaws/Acts/2010/Chapter258
The law only applies to “foreclosing owners” as defined in the law. See c. 186A, §
1 (definition of “foreclosing owner”).
The provisions dealing with the contact information notice are in § 3.
See § 2.
“Bona fide tenant” is defined in § 1.
This language comes from the statutory definition in § 1. It is not clear at this time
how broadly courts will interpret this language but it would appear to cover many
actions by foreclosing owners other than service of legal documents.
28
Endnotes
10
11
12
13
14
15
“Just cause” is defined in § 1.
§§ 3 & 4 address the notices required in order for a foreclosing to evict
for just cause. § 6 addresses the penalties for unlawful evictions.
See PTFA §702 (as amended 2010).
For more about the basic rights of tenants in foreclosed properties see:
http://www.masslegalservices.org/node/23601 and
http://www.lawlib.state.ma.us/subject/about/tenantsinforeclosure.html
See note #13 above.
See note #3 above.
29