Assignment of Rents
The Federal Government has added an amendment to the Helping Families Save Their Homes Act of 2009. Specifically, they added the “Protecting Tenants at Foreclosure Act of 2009”. Based on this law, it creates one more cog for associations in their fight to collect unpaid assessments.
As we have said in the past, amend your documents to allow for assignment of rents to the association when an owner who has a tenant becomes delinquent. In addition, only allow one (1) year leases, with the association having the ability or the mechanism to approve any renewal. Below is a summary of what has passed:
“All tenants must receive a 90-day notice before being evicted as the result of a foreclosure.
With some exceptions, the law requires that in the event of foreclosure, existing leases for renters are honored to the end of the term of their lease.
The stated exceptions are for tenants without a lease, tenants with a lease terminable at will under state law, or where the owner acquiring the property will occupy it as a primary residence. In these cases, the tenants must receive a minimum of 90 days notice to vacate the property.
This law does not affect the requirements of any state or local law that provides longer time periods or other additional protections for tenants.
The new law does not require any agency to issue implementing regulations; these protections apply to foreclosures after May 20, 2009.
FDIC examiners will monitor and enforce compliance with the requirements of this law in the same manner as other consumer protection laws and regulations.”
Review this article and consult with your association’s attorney to see what can be done to combat this new “Pro Banking” law.
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