FNMA v. Nunez: Tenant Foreclosure Act Applied Retroactively
On September 6, 2011, in Federal National Mortgage Association v. Nunez (embedded below), the Supreme Judicial Court considered for the first time the 13-month-old “Tenant Protections In Foreclosed Properties” Act which protects tenants living in foreclosed properties from eviction in certain circumstances. The issue was whether the Act applied retroactively, and the court answered “yes,” applying it “to protect all residential tenants on foreclosed properties who, on or after August 7, 2010, had yet to vacate or be removed from the premises by an eviction, even where the owner purchased the property before the act’s effective date, and initiated a summary process action before that date.”
Summary Of Act
The Act, passed in August 2010 and now codified in a new Mass. General Laws Chapter 186A, bans institutional lenders (not private parties) who own foreclosed properties from evicting residential tenants without “just cause.” What this means in plain English is that foreclosing lenders such as Fannie Mae cannot evict tenants of foreclosed properties unless they stop paying rent or commit serious lease violations such as illegal activity on the premises.
Loophole: Private Purchasers
There is a huge loophole in the Act however. It does not apply to private individuals who purchase properties at foreclosure. They are free to evict tenants for any reason. But, they must provide tenants with at least 90 day notice to move, and the tenant retains the right to ask for more time to leave in any eviction legal proceeding.
Impact: Slow Down In Sales of Foreclosed Properties
The impact of this ruling will be to expand the number of tenants who will be protected from eviction when their apartments fall into foreclosure. It will also slow down the pace of selling off REO and foreclosed properties to individual owners and investors who will now inherit tenants with expanded occupancy rights in foreclosed properties.
Richard D. Vetstein, Esq. is an experienced real estate litigation attorney who’s handled over 500 eviction cases in the District and Housing Courts. Please contact him if you are dealing with a Massachusetts landlord-tenant dispute.