MA Seeks to Protect Tenants from Foreclosure

A House and corresponding Senate bill aimed to protect tenants who occupy a foreclosed property from eviction has had favorable responses and has strong potential to become law in MA.

H. 1483 and S. 1047, “An Act preventing unnecessary vacancies in foreclosed homes” will create certain duties on foreclosing plaintiffs and foreclosure sale purchasers that (1) prevent an eviction of occupying tenants in certain instances and (2) create statutory penalties separate and distinct from a cause of action in illegal eviction.

In part, the bills would create a requirement in which a notice must be provided to the occupants within 30 days of the foreclosure stating the names, addresses, telephone numbers and telephone contact information of the owner or foreclosure purchaser. The notice must contain the address to which the rent, or in the case of the former mortgagor the agreed upon monthly rent payments or Fair Market Rent, shall be sent.

If the tenant has not failed to pay such rent to said foreclosure sale purchaser as a result of the notice, the tenant will be protected from eviction except for “just cause” or if there is a binding purchase and sale agreement to sell the property to a bona fide third party. In the bill, “just cause” is specifically defined.

Mortgage servicers, investors and third-party individuals whose investment strategy may include the purchase of foreclosed properties must pay careful attention to these bills. If passed, they (1) create circumstances where an eviction is unlawful, (2) create new procedures and a duty on the foreclosing party and/or foreclosure sale purchaser that, if ignored or not followed, will cause statutory penalties of no less than $5,000.00 and (3) continue to allow for a separate cause of action for illegal eviction despite the statutory penalty being levied.