The Arizona Landlord and Tenant Act and Foreclosure
To help residents renting homes with unexpected foreclosures, Arizona's legislature passed new laws amending the state's Residential Landlord Tenant Act. The changes to the state's existing code include requirements for landlords to provide written notices to prospective tenants of a pending foreclosure action. To protect Arizona's tenants that enter into leases after initiation of a foreclosure proceeding against the tenant's landlord, the state's legislature enacted laws to protect them against hasty evictions.
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History of New Legislation
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In 2009, Congress enacted the federal Protecting Tenants at Foreclosure Act to help tenants in rentals avoid unexpected homelessness due to foreclosure proceedings against their landlords. The new congressional act allows tenants with valid lease agreements limited rights during pending foreclosure actions. Under the federal law, tenants have a legal right to remain in their rentals during foreclosure for the remainder of the lease term. For tenants with month-to-month leases, tenants can remain in their rentals for up to 90 days. If the tenant is paying the bank or new owner rent, tenants cannot be forced out of their rentals during this time. The new legislation does not provide tenants with notice rights and does not protect tenants who enter into lease agreements after a bank issues a Notice of Foreclosure.
A.R.S. Section 33-1331 and Section 33-1361
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Under the new laws, Arizona landlords must include language in their lease agreements of any impending foreclosures and whether a sale date has been established by the bank. Landlords who fail to provide this written notice to tenants may have to refund a tenant's security deposit within 14 days, and tenants may terminate their lease agreements.
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Notice of Foreclosure
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The landlord's Notice of Foreclosure included in the rental agreement must include a statement that the property is undergoing foreclosure with the names, addresses and phone numbers to the local clerk's office in the court where the foreclosure action is pending. Additionally, the landlord's notice must include information about any possible sales if no sale date has been set. If the bank has scheduled a sale, then the landlord must include the date and place of sale.
Tenant's Rights of Recovery
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When landlords do not provide this written Notice of Foreclosure, then tenants have a right to damages and rights to terminate their lease agreements only if they provide their landlords with a written notice. The tenant's written notice must provide the landlord with 10 days to provide the Notice of Foreclosure. If the landlord doesn't provide this notice, then the tenant can recover damages or terminate the lease.
Considerations
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Since real estate laws can frequently change, you should not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your jurisdiction.
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References
- National Low Income Housing Coalition: Your Rights Under the Protecting Tenants at Foreclosure Act
- Arizona Real Estate Investors Association: AZ Legislature Requires Landlords to Give Tenants Notice of Foreclosure
- Arizona Government: Department of State Office of Secretary of State: Residential Landlord & Tenant Act
Resources
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