Michael Pilgrim
Active 7 years, 3 months agoForum Replies Created
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Jackie-
On the face of it the new tenant protection legislation, Senate Bill 896 that was signed into law last mid-May, seems to favor the lessee. However, the bank can still sell the property to a prospective buyer who intends to live in the house then the lease is terminated and the lessee will be given 90 days max to leave. This law expires on Dec. 31, 2012 then the old rules apply(lease is terminated at foreclosure and no required 90 days to leave).HR 1728 that passed the House and is in the Senate Finance Committee requires the foreclosing party to honor the lease to its full term (I would do a 30 year lease then) without the loophole for the foreclosing party to “claim” they are selling to a purchaser who intends to live in the property. But the Senate Finance Committee has already announced its intention to put this off until 2010 or 2011, if then.
My question is to Mssrs. Miller, Fortunato, Tilney and yourself are as follows under the new legislation for tenant protection:
A. What do you do when major repairs are required and the bank/mortgage servicer does not repair or delays repairs( just as they are clueless about lending, short sales of properties, etc.)?? Simply file liens and you pay for the repairs and you to recover the monies at a later date?? Banks pay slow or not until they sell the property.
B. In the new legislation, the language in the bill says the property that was foreclosed upon cannot be leased “substantially below market rents”. What is your and their opinion as to what “substantially below market rents” mean??
C. What types of language should be used in this type of master lease when obtaining a lease on a soon to be foreclosed owner so that the bank/mortgage servicer will find it difficult to sell to a buyer that intends to live in the property that would void the lease??
D. The new law requires that the lease be entered into prior to the notice of foreclosure in order for the foreclosing party to honor the lease. Do they mean when a lis pendens is filed or when a final notice of foreclosure is filed??
E. How does the lessee know if a prospective intends to “live in the property” or an investor and/or bank collude to simply say that but it is not true?? What are the remedies for that??
Jackie, thank you and the others in advance. I find this to be an intriguing opportunity once we all have the rules of engagement defined and planned out.
Hello Vic-
http://www.thomas.gov or the library of congress
S.896 Helping Families Save Their Homes Act of 2009
Title VII-Protecting Tenants at Foreclosure Act
Section 701 “Protecting Tenants at Forecloause Act of 2009
Section 702-Effect of Foreclosure on Preexisting Tenancy
Section 703-Effect of Foreclosure on Section 8 Tenancies
Section 704-Sunset (which means this law expires De.31,2012.)
Hope this helps!!
Jackie-
What is your opinion of the “definitions” used in HR 1728
such as:Define “substantially less” than fair market value for rents??
Define “a bona fide lease must be enterred into before date of foreclosure”?? Is it when a lis pendens or NOD is filed or the actual court ordered date or deed of trust sale??
Also, in Tilney’s class, the owner is responsible for major repairs-I do not see the bank or hedge fund owner doing this or it may take a long time to get $$ reimbursed for a major repair?? How do we handle this??
I agree that eventually the bank will want a major discount to sale a property with a xx% below market rent for 20 years (as the value of the property has been reduced by this). But it will take a while I am sure.
Insurance issues????
Please see if Jack or David or yourself have the answers. Thank you in advance!!
Jackie-
Senate Bill 896 that was signed into law by President Obama on May 20, 2009 is NOT the same as HR 1728’s provisions and here are the differences:
Senate Bill 896 ONLY bona fide tenants with 90 days notice prior to eviction AND allow bona fide tenants with leases to occupy the property until the end of the lease term EXCEPT the lease CAN BE TERMINATED on 90 days notice if the residential unit/dwelling is SOLD to a purchaser who will occupy the property.
S.896 allows successor in foreclosure(i.e. the mortgagee) to sell to a buyer who intends to occupy the property for their own—-not good.
H.R. 1728 allows a bona fide tenant with a lease to stay for the full term of the lease plus 90 days!!!
Also, note in both pieces of legislation that the definitions for “bona fide tenant and bona fide lease” is the same in HR 1728 and Sen.896 that was signed into law.
The only prayer for a master lease is if HR1728 passes the Senate and signed by the El Presidente himself!!
:)Jackie, Under Section 220 titled as “Tenant Protection” under H.R. 1728 it defines what a “bona fide lease or tenancy” is:
A. the mortgagor under the contract is NOT the tenant;
B.the lease or tenancy was the result of an arms-length transaction; and
C. the lease or tenancy requires the receipt of rent that is NOT substantially LESS THAN fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy.In addition, the rights of a bona fide tenant, as of the date of foreclosure under any bona fide lease entered into before the date of foreclosure, may continue to occupy the premises until the end of the remaining term of the lease THEN the immediate successor in the interest in such property shall assume the lease.
Also, each person or entity who owns residential property shall notify any tenant of the circumstances prevailing with respect to the property and the effect of any such default or foreclosure. (Obviously, record the lease!!)Question: Define substantially LESS than fair market rent.
Also, can the mortgagee terminate the lease if for more than 3 years term as it violates the due-on-sale clause???
