CHANGES IN LAWS AFFECTING LAND OWNERS

There have been recent changes in both federal and state laws which affect our clients, whether managing rentals or purchasing properties at trustee’s sale.  This contains only a brief overview of some, but not all of the relevant, legislative updates.  Before taking any action regarding these statutes, its best to contact us to determine how these new laws affect your specific circumstances.

Changes to the Protecting Tenants at Foreclosure Act – As most of our investor clients know, on May 20, 2009, President Obama signed into law the Protecting Tenants at Foreclosure Act, the effect of which was to have a lease “survive” a foreclosure so that a good faith tenant could not be evicted by the new owner.  Please sign in on the Landlord Representation page to get a full analysis of the original version of this law.  Recently, US Congress made two significant changes to the law. 

First, the law has been extended through December 31, 2014, it previously expired in 2012.  Second, the law clarified what leases will be considered valid, based upon when they were entered into.  Previously, as the law was interpreted, a tenant was not protected if the lease was dated after the Notice of Trustee’s Sale.  Now, the lease may be considered valid, unless it is entered into after the trustee’s sale has actually occurred.  The fact that the lease was signed after the Notice of Trustee’s Sale, no longer automatically invalidates it.  Of course, there may be other reasons why the lease is invalid or why the tenant may not be considered a good faith tenant entitled to statutory protections.  This must be determined on a case by case basis.  Please contact us to discuss the specifics regarding your purchases.

Arizona HB 2766 – Arizona law requiring notice to prospective residential tenants of pending foreclosure – A.R.S § 33-1331.  This law is part of the Arizona Residential Landlord Tenant Act. Effective July 29, 2010, an owner of a rental property is required to include specific language in a lease if the home is in foreclosure.  This applies where the home is actually pending foreclosure prior to the lease being entered into.  It does not apply to multifamily residential properties, consisting of four or more connected units.  The statute provides a tenant’s remedies when a landlord fails to comply.  The lease must contain the following language:

THIS PROPERTY IS UNDERGOING FORECLOSURE. FOR MORE INFORMATION ON THIS ACTION, YOU SHOULD CONTACT ________________ (NAME, ADDRESS AND PHONE NUMBER OF THE COURT WHERE THE ACTION IS FILED OR TRUSTEE, ATTORNEY OR OTHER RESPONSIBLE PARTY).  A SALE AT AUCTION MAY OR MAY NOT OCCUR AS A RESULT OF THIS FORECLOSURE. CURRENTLY, THE SALE OF THIS PROPERTY HAS BEEN SET FOR _________ (TIME, DATE AND PLACE) OR NO DATE FOR SALE OF THIS PROPERTY HAS BEEN ESTABLISHED.

Arizona HB 2450 – Cities providing water service may only charge past water bills to those persons who contracted for them – A.R.S. 9-551.01.  While this may seem obvious, this statute was enacted as a result of cities charging a new tenant for the unpaid water bill incurred by a previous tenant.  In Tucson, for example, the city was refusing to provide water service to new tenants in mobile home parks, unless the new tenant or the landlord paid the bill which was contracted for by the old tenant.  This statute prohibits such conduct and limits the remedy of the city to pursuing the former tenant.  In other words, a new tenant must be provided water service, if they meet the qualifications, despite an outstanding balance being owed on the premises due to a former tenant.