Provides for the continued occupancy of a property by tenants and owner-occupants during and after foreclosure proceedings

Subsection 1 defines "tenant in occupancy of the foreclosed property" and "owner occupant" for purpose of this section.

Subsection 2 protects tenants in foreclosed properties by requiring entities acquiring title to the property to notify tenants of their right to remain in occupancy as month-to-month tenants under the same rent, as well as other terms and conditions, as were in effect at the time of transfer of title. The tenant has the option to renew the tenancy for six monthly terms, or to terminate the lease upon thirty days notice to the owner.

Subsection 3 ensures that this bill does not interfere with existing rights of tenants not named in the foreclosure action.

Subsection 4 clarifies that, when the property is re-sold prior to the expiration of the six monthly terms described in subsection 2, the tenants' right to renew their monthly tenancy during the six month period is not extinguished. At the end of the six month, period, the tenant becomes a monthly tenant whose tenancy is governed by RPL section 232-a (New York City) or RPL section 232-b (outside of New York City).

Subsection 5 governs the right of owner-occupants to remain in the property as tenants after a foreclosure, pursuant to subsection 2, with rents no higher than 110% of the applicable Section 8 Fair Market Rents as set by the US Department of Housing and Urban Development.

Subsection 6 makes it clear that tenants retain the protections they already have under existing laws, including the state's rent regulation laws.

Justification

This legislation seeks to address the plight of tenants, who are often innocent victims of foreclosure proceedings commenced by lending institutions against homeowners and landlords unable to pay their mortgages. Most tenants are current in their rent and have done nothing to deserve displacement from their homes. It also seeks to provide stability to blocks and communities threatened by foreclosures, by ensuring that buildings will remain occupied and not subject to vandalism, deterioration and other conditions that lead to neighborhood blight.

This bill supplements S-1363C, which passed the Senate in April, in a number of ways. It extends protections to tenants of buildings of six or more units. Particularly in areas of the state not governed by rent regulation, large numbers of tenants in multifamily dwellings are potentially vulnerable to displacement following foreclosure if a bill such as this is not passed. Secondly, this bill explicitly covers tenants not named in the foreclosure action and provides them with security of tenure. This is necessary because most occupants other than the owners of smaller dwellings are not named in the foreclosure action. Thirdly, whereas S1363-C provides tenants who are named in the foreclosure action with 90 days notice, but no real security of tenure, this bill allows tenants the option of remaining as month-to-month tenants, which brings stability to the lives of the tenants and allows them time to find suitable housing; and contributes to community stability by reducing the likelihood of abandoned properties in neighborhoods.

Legislative history

None. This is new legislation.

Fiscal implications

None.

Effective date

This act shall take effect on the 90th day after it shall have become a law.