Former Owners Increasingly Refuse to Vacate Following Foreclosure Sale -- New Owners Forced to Evict

San Antonio Eviction Lawyer - Bexar County Eviction Attorney Trey Wilson wrote:

Sadly, my San Antonio evictions practice frequently involves the filing of FE&D suits to remove former owners from homes they lost through a foreclosure and the attendant sale on the Courthouse steps. My client is almost always an innocent third party who purchased the property at the foreclosure /Substitute Trustee's Sale, but cannot take possession because the former owner refuses to vacate.

Theses cases are never fun, and I feel bad for the former owner.  However, I find a little solace in the fact that the former owners have a set of remedies available to them. Further, those remedies are not against the new owner, but rather, against the bank or other lender who posted the home for foreclosure, and ultimately sold it to the new owner (my client).

It seems like lately, more often than ever, the former owners are fighting the evictions -- which the new owner rarely loses based upon the Substitute Trustee's Deed evidencing the change in ownership.  When the former owner is unsuccessful in stopping or defeating the eviction, he or she frequently "lawyers-up" and runs to District Court to file a new lawsuit and obtain a Temporary Restraining Order that prevents the Eviction Judgment from being carried out.  

Invariably, the new suits allege all sorts of misdeeds on the part of the lender who foreclosed, allege that the foreclosure was invalid, and seek a court declaration that the sale to the new owner is invalid and should be reversed. 

When neither the new owner nor the lender who foreclosed are Texas residents, these suits usually end-up in federal court.  Yes -- eviction suits wind up becoming "federal cases."

Increasingly, it seems that the Judges -- both state and federal -- are now recognizing that the new owner had nothing to do with the mortgage loan, how it was serviced, or whether the lender violated some law in conducting the sale. Instead, the new owner is just somebody who spent their money and received nothing in return but a lawsuit. In light of this recognition, we are achieving a large degree of success in obtaining possession of the property for the new owner, notwithstanding the fact that the "wrongful foreclosure" lawsuit against the lender remains pending.

Purchasers of real properties on the Bexar County courthouse steps who find themselves wrapped-up in a wrongful foreclosure suit against a foreclosing lender are well advised to hire an experienced eviction lawyer.

Special Rules Apply to TENANTS of Foreclosed Properties -- Proceed Carefully with Evictions

San Antonio Eviction Lawyer - Bexar County Eviction Attorney Trey Wilson wrote:

In a previous post, I touched on the process for evicting former owners of residential properties who remained on the premises after the cessation (through Trustee's Sale) of their ownership.  In those circumstances, former owners are generally not entitled to any special protections.  

Tenants of those owners, however, have multiple layers of protection that must be considered when contemplating a post-foreclosure eviction.  These layers arise from both federal and Texas state law.

The federal law, known as the "Protecting Tenants at Foreclosure Act of 2009," (referred to herein as "PFTA") became effective on May 20, 2009 and remains in force until December 31, 2014 under its own "sunsetting provision."  The Act will likely be extended by further federal action.

The Texas state law is found in Section 24.005(b), and currently has no expiration date. The state law relates to the amount of notice a tenant is entitled to before they are required to vacate. It  provides (in relevant part) as follows:  

(b)  ... If a building is purchased at a tax foreclosure sale or a trustee's foreclosure sale under a lien superior to the tenant's lease and the tenant timely pays rent and is not otherwise in default under the tenant's lease after foreclosure, the purchaser must give a residential tenant of the building at least 30 days' written notice to vacate if the purchaser chooses not to continue the lease. The tenant is considered to timely pay the rent under this subsection if, during the month of the foreclosure sale, the tenant pays the rent for that month to the landlord before receiving any notice that a foreclosure sale is scheduled during the month or pays the rent for that month to the foreclosing lienholder or the purchaser at foreclosure not later than the fifth day after the date of receipt of a written notice of the name and address of the purchaser that requests payment.

See Texas Property Code Section 24.005(b).

The PFTA, by contrast, requires that in the case of most foreclosures, the successor owner takes title to the property subject to (i) an obligation to give a BONA FIDE TENANT at least 90 days for any notice to vacate; and (ii) the rights of a BONA FIDE TENANT to occupy the property until the expiration of a lease existing at the time the notice of foreclosure is posted (unless the new owner plans to occupy the property as his primary residence).

The PFTA contains a specific definition of BONA FIDE TENANT, and that term is key to whether the federal law's protections apply.

An Owner or Manager faced with existing tenants following a foreclosure sale would be wise to contact an experienced eviction attorney to analyze those tenants' rights to continued occupancy or possession of the property.  Acts in violation of federal law could result in penalties or damages being asserted by the tenant against the Owner or Manager.  

HUD has issued a helpful explanatory Notice relating to the PFTA.