- City Ordinances Outdoing Federal Legislation to Benefit Renters at Lenders' Expense
- May 8, 2013 | Author: Larry R. Rothenberg
- Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Cleveland Office
In the past, lenders acquiring title to property through foreclosure, would, for the most part, automatically seek to evict any tenants in order to be able to market the property for sale as quickly as possible. In 2009, Congress enacted the federal "Protecting Tenants at Foreclosure Act," (PTFA) with the intention of providing some relief to tenants who were unaware that the property was foreclosed and were being forced to leave the premises upon very short notice. The PTFA required that the title to the foreclosed property be subject to the provision of at least a 90 day notice prior to commencing an eviction of a bona fide tenant, and the title was subject to the rights of any bona fide tenant under a bona fide lease. Some lenders have recently adopted programs to enter into new rental agreements with the tenants under appropriate circumstances.
On May 1, 2013, apparently following the lead of cities in California, a Chicago City Council committee reportedly passed a measure that would require lenders that repossess a Chicago foreclosed rental building of any size, whether a detached single-family home or an apartment high-rise, to offer tenants $12,000 per rental unit in relocation expenses or leases with annual rent increases of no more than 2%. According to the report, no lender spoke at the committee hearing, although the proposed ordinance is opposed by the Mortgage Bankers Association and the Illinois Bankers Association. The ordinance is scheduled to remain with the committee until June 5 in order to allow additional time to hear from opponents.
This is likely to be a developing trend, as cities seek solutions to their foreclosure blight problems.