The Protecting Tenants at Foreclosure Act of 2009 (PTFA) is a federal law (statute) that became effective on May 20, 2009. The law expired on December 31, 2014 but was restored on June 23, 2018. The PTFA is located in the United States Code, beginning at 12 U.S.C. §5220.

The PTFA protects tenants from immediate eviction by persons or entities that become owners of residential property through the foreclosure process and extends additional protections for tenants with U.S. Department of Housing and Urban Development (HUD) Section 8 vouchers. The law is self-executing—no federal agency has authority to issue regulations implementing the law or to interpret the law.

The fundamental purpose of the PTFA is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing. To achieve that objective, the law establishes a minimum time period that a tenant can remain in a foreclosed property before eviction.

The PTFA does not affect any state or local law that provides longer time periods or other additional protections for tenants.

Bona Fide Lease or Tenancy

A lease or tenancy is bona fide if:

• the tenant is not the mortgagor or the parent, spouse, or child of the mortgagor;

• the lease or tenancy is the result of an arms-length transaction; and

• the lease or tenancy requires rent that is not substantially lower than fair market rent or is reduced or subsidized due to a federal, state, or local subsidy.

Requirements

Under the PTFA, the immediate successor in interest at foreclosure must:

• provide bona fide tenants with 90 days notice prior to eviction; and

• allow bona fide tenants with leases to occupy property until the end of the lease term—except the lease can be terminated on 90 days notice if the unit is sold to a purchaser who will occupy the property.

In South Dakota, as in all states, the Protecting Tenants at Foreclosure Act of 2009 (PTFA) provides federal protections for tenants living in foreclosed properties. The PTFA, which was reinstated on June 23, 2018, after expiring in 2014, ensures that tenants are not immediately evicted by new owners following a foreclosure. It requires that bona fide tenants receive a 90-day notice before eviction and allows them to stay until the end of their lease term unless the property is sold to someone who plans to occupy it as a primary residence, in which case the lease can be terminated with a 90-day notice. A bona fide lease is one where the tenant is not related to the mortgagor, the lease was made in an arms-length transaction, and the rent is at fair market value or subsidized by a government program. The PTFA does not supersede state or local laws that provide greater protection to tenants. Therefore, in South Dakota, tenants in foreclosed properties are entitled to these federal protections, and any additional protections provided by state or local laws would also apply.