In the context of residential foreclosures, one of the biggest issues facing foreclosing lenders is handling non-borrower tenants and occupants of the subject property. Tenant and occupant issues have, until recently, been adjudicated under state substantive property law and procedural foreclosure rules. The “Protecting Tenants at Foreclosure Act of 2009” Pub. L. No. 111-22 §701-703, 123 Stat. 1632 (2009)(the “Act”), however, imposed a top-down national scheme relating to occupants of foreclosed properties. The Act gives no consideration to variations in state foreclosure laws and procedures, and has only served to create confusion and injustice.

In addition to Congress’s heavy-hand, courts have improperly applied the Act to grant generous benefits to property occupants, and to prejudice the rights of foreclosing lenders. The Act and case law, indefensible as they may be, will obviously play a role in developing strategy and tactics when the lender seeks to remove an occupant who is not the borrower. With the extension of the Act to 2014 with the passage of the Dodd-Frank Financial Reform Act, it is now even more crucial for lenders to implement a strategy for handling non-borrower tenant situations.