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Third Community Association Bill Signed into Law: Landlord/Tenant Foreclosure and Eviction Changes

Community Association LegislationHouse Bill 174 “Landlord/Tenant-Foreclosure & Evict. Changes” (with the full title of “An Act to Amend and Enhance Certain Notice Requirements and Protections for Tenants of Real Properties in Foreclosure and to Allow for Purchasers of Real Property Under Option Contracts to Pursue Monetary Damages Separately from Summary Ejectment Proceedings and Other Amendments to the Homebuyer Protection Act”) was ratified by the North Carolina General Assembly on July 28, 2015, and signed by Governor McCrory on Thursday, August 6, 2015. HB 174 becomes the third piece of legislation that could impact community associations passed into law this year (see First Community Association Bill Signed into Law and Second Community Association Bill Signed into Law).  For a full list of filed HOA/condo bills, visit Community Association Legislative Roundup – May 14, 2015.

The federal “Protecting Tenants in Foreclosure Act of 2009” expired on December 31, 2014.  Prior to that the Act protected tenants of foreclosed properties by providing that if a tenant had a valid lease and a property was foreclosed upon, the tenant could not be required to leave until the end of the lease OR 90 days after a new owner purchased the property with the intent to move in.  Under the Act, leases had to “bona fide,” which meant the rental had to have been entered into prior to foreclosure, couldn’t be with a family member, for real money, etc.  HB 174 provides similar protections to pre-existing tenants of foreclosed properties as the now-expired federal Act by providing that:

  1. If a property contains less than 15 rentals, any notices of foreclosure sale must be sent by first-class mail to any person occupying the property through a rental agreement
  2. If a purchaser at foreclosure WILL NOT occupy the premises as a primary residence, the purchaser assumes title subject to the rights of any tenant to remain in the premises until the end of the lease or one year, whichever is shorter.
  3. If a purchaser at forecloser WILL occupy the premises as a primary residence, the purchaser must provide any tenant at least 90 days’ notice to vacate before making an application for possession.
  4. If a foreclosed property has a tenant subject to an oral lease or a lease terminable at will, the purchaser must provide at least 90 days’ notice to vacate before making an application for possession.

There are other aspects to the new law, so if you have questions it may be best to view the full bill at http://www.ncleg.net/Sessions/2015/Bills/House/PDF/H174v4.pdf

Author: Jim Slaughter
Articles have been Reprinted with permission from Black, Slaughter, Black.

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