Short title

This Act may be cited as the

Protecting Tenants at Foreclosure Act of 2009

Effect of foreclosure on existing tenancy

(a)

In General

In the case of any foreclosure on any dwelling or residential real property, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to— (1)the provision, by such successor in interest, of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and (2)the rights of any bona fide tenant, as of the date of such notice of foreclosure— (A)under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or (B)without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1),

except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.

(b)

Bona Fide Lease or Tenancy

For purposes of this section, a lease or tenancy shall be considered bona fide only if— (1)the mortgagor under the contract is not the tenant; (2)the lease or tenancy was the result of an arms-length transaction; and (3)the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property.

Effect of foreclosure on section 8 tenancies

Paragraph (7) of section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended— (1)in subparagraph (C), by inserting before the semicolon at the end the following:

, and in the case of an owner who is an immediate successor in interest pursuant to foreclosure—(i)during the initial term of the tenant’s lease having the property vacant prior to sale shall not constitute good cause; and (ii)in subsequent lease terms, having the property vacant prior to sale may constitute good cause if the property is unmarketable while occupied, or if such owner will occupy the unit as a primary residence

;

(2)in subparagraph (E), by striking and at the end; (3)by redesignating subparagraph (F) as subparagraph (G); and (4)by inserting after subparagraph (E) the following:

(F)shall provide that in the case of any foreclosure on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit; if a public housing agency is unable to make payments under the contract to the immediate successor in interest after foreclosure, due to action or inaction by the successor in interest, including the rejection of payments or the failure of the successor to maintain the unit in compliance with paragraph (8) or an inability to identify the successor, the agency may use funds that would have been used to pay the rental amount on behalf of the family— (i)to pay for utilities that are the responsibility of the owner under the lease or applicable law, after taking reasonable steps to notify the owner that it intends to make payments to a utility provider in lieu of payments to the owner, except prior notification shall not be required in any case in which the unit will be or has been rendered uninhabitable due to the termination or threat of termination of service, in which case the public housing agency shall notify the owner within a reasonable time after making such payment; or (ii)for the family’s reasonable moving costs, including security deposit costs;

except that this subparagraph and the provisions related to foreclosure in subparagraph (C) shall not affect any State or local law that provides longer time periods or other additional protections for tenants.