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On January 25, the Biden administration announced new actions for enhancing tenant protections and furthering fair housing principles, which align with the administration’s Blueprint for a Renters Bill of Rights that was released the same day. The Blueprint and fact sheet lay out several new actions that federal agencies and state and local partners will take to protect tenants and increase housing affordability and access.
- The FTC and CFPB will collect information to identify practices that unfairly prevent applicants and tenants from accessing or staying in housing, “including the creation and use of tenant background checks, the use of algorithms in tenant screenings, the provision of adverse action notices by landlords and property management companies, and how an applicant’s source of income factors into housing decisions.” According to the White House, this marks the first time the FTC has issued a request for information that explores unfair practices in the rental market. The data will inform enforcement and policy actions under each agency’s jurisdiction.
- The CFPB will issue guidance and coordinate enforcement actions with the FTC to ensure information in the credit reporting system is accurate and to hold background check companies accountable for having unreasonable procedures.
- The FHFA will launch a transparent public process for examining “proposed actions promoting renter protections and limits on egregious rent increases for future investments.” Periodic updates, including one within the next six months will be provided to interested stakeholders. FHFA Director Sandra L. Thompson commented that the agency “will conduct a public stakeholder engagement process to identify tangible solutions for addressing the affordability challenges renters are facing nationwide, particularly among underserved communities. The proposals discussed during this process will focus on properties financed by [Fannie Mae and Freddie Mac].” She noted that FHFA will continue to evaluate Fannie and Freddie’s role in providing tenant protections and advancing affordable housing opportunities.
- The DOJ intends to hold a workshop to inform potential guidance updates centered on anti-competitive information sharing, including within the rental market space.
- HUD will publish a notice of proposed rulemaking to require public housing authorities and owners of project-based rental assistance properties to provide tenants at least 30 days’ advanced notice before terminating a lease due to nonpayment.
- The Biden administration will also hold quarterly meetings with a diverse group of tenants and tenant advocates to share ideas on ways to strengthen tenant protections.
According to the announcement, the agencies’ actions exemplify the principles laid out in the Blueprint, which underscores key tenant protections, including: (i) renters should be able to access safe, quality, accessible, and affordable housing; (ii) renters should be provided clear and fair leases with defined rental terms, rights, and responsibilities; (iii) federal, state, and local governments should ensure renters are aware of their rights and are protected from unlawful discrimination and exclusion; (iv) renters should be given the freedom to organize without obstruction or harassment from housing providers or property managers; and (v) renters should be able to access resources to prevent evictions, ensure eviction proceedings are fair, and avoid future housing instability.
The administration also announced it is launching a related “Resident-Centered Housing Challenge”—a call to action for housing providers and other stakeholders to strengthen their practices and make independent commitments that will improve the quality of life for renters. The Challenge will launch this spring and encourages states, local, tribal, and territorial governments to improve existing fair housing policies and develop new ones.
On March 15, California launched their CA COVID-19 Rent Relief Program to aid landlords and renters who have unpaid rental debt due to Covid-19. In order to be eligible, a tenant must have “suffered a financial hardship” as a result of Covid-19 and have 80% or less of the area median income for their location. Landlords with eligible tenants may receive up to 80% of a tenant’s unpaid rent if they agree to waive the remaining 20%.
On January 29 , the Colorado governor issued Executive Order 2021-029 amending and extending Executive Order 2020-307, which set forth certain tenant protections. Executive Order 2020-307 prohibits a landlord, mobile home park owner, property management entity, and others from charging a fee or penalty against a tenant or mobile home owner for failure to timely pay rent. Executive Order 2021-029 extends the moratorium on late fees until 30 days after January 29, 2021, unless extended further by executive order.
On January 29, the California governor signed SB 91, which provides relief to tenants and small property owners, and extends the eviction moratorium established under AB 3088 (previously discussed here), which is set to expire at the end of January. Among other things, under SB 91, a housing provider and similar entities are prohibited from using an alleged Covid-19 rental debt as a negative factor for evaluating a prospective housing application. In addition, the bill would prohibit a person from selling or assigning unpaid rental debt or charging or increasing fees related to late payment of Covid-19 rent. The bill also extends other eviction protections to July 1, 2021.
On August 31, the California governor signed AB 3088, which provides relief from eviction and foreclosure due to the economic impacts of Covid-19. Pursuant to AB 3088, a tenant may not be evicted before February 1, 2021 if a Covid-19-related hardship caused the tenant to miss a rent payment accruing between March 4 and August 31, 2020, if the tenant provides a declaration of hardship that complies with certain timelines set forth in the legislation. For hardships that accrue between September 1, 2020, and January 1, 2021, tenants must pay a portion of the rent due to avoid eviction. Among other things, the legislation also extends anti-foreclosure protections in the Homeowners Bill of Rights to small landlords.
On March 2, the OCC announced an update to the Protecting Tenants at Foreclosure Act booklet of the Comptroller’s Handbook. The revised booklet is intended to provide examiners with information and procedures concerning foreclosure activities and related consumer protections under the Protecting Tenants at Foreclosure Act of 2009 (PTFA). Among other things, the booklet provides a summary of requirements and addresses risks associated with a bank’s compliance with PTFA. The OCC notes that the Economic Growth, Regulatory Relief, and Consumer Protection Act made permanent certain sections of PTFA, and states that the applicable provisions “apply to any immediate successor in interest—including banks—that foreclose on a federally related mortgage loan or on any dwelling or residential real property, as defined in section 3 of [RESPA], that is subject to a bona fide lease, as defined in the PTFA and in 12 USC 2602.”
Sixth Circuit Holds PTFA Preempts Less Restrictive State Law, May Be Used To Establish State Law Causes Of Action
On February 7, the U.S. Court of Appeals for the Sixth Circuit held that while the Protecting Tenants at Foreclosure Act (PTFA) provides no private cause of action, plaintiffs may use violations of the PTFA to establish elements of a state law cause of action. Mik v. Fed. Home Loan Mortgage Corp., No. 12-6051, 2014 WL 486214 (6th Cir. Feb. 7, 2014). Tenants filed suit alleging they were unlawfully evicted from their rental home after their landlord defaulted on her mortgage and the property was sold at a foreclosure sale. The trial court held that the tenants only asserted claims under the PTFA, which does not grant a private right of action, and dismissed the complaint. On appeal, the Sixth Circuit affirmed that the PTFA does not provide a private cause of action, and that, under the Supremacy Clause, the PTFA preempts state law that is less restrictive of tenants. However, it held that, because tenants have no opportunity to raise PTFA as a defense in cases where successors in interest do not initiate judicial proceedings, they must be permitted to use available state law causes of action, such as wrongful eviction, to enforce the PTFA’s protections. To hold otherwise, the court explained, would render the PTFA’s protections virtually meaningless because “a foreclosure sale purchaser could ignore its protections with impunity, bypass judicial process and evict any tenant without notice or court process.” The court held that, here, the tenants’ allegations that the successor failed to meet certain requirements of the PTFA were sufficient to support a claim for the tort violation of wrongful eviction. The court did not find that the tenants similarly sufficiently alleged due process violations and outrageous infliction of emotional distress under Kentucky law. The court reversed in part and affirmed in part, and remanded for further proceedings.
On January 23, the California Court of Appeal, Sixth District, held that under the federal Protecting Tenants Against Foreclosure Act (PTFA) a lease survives foreclosure through the end of the lease term, except under limited circumstances, and allows tenants to bring state law claims for violation of the federal law. Nativi v. Deutsche Bank Nat’l Trust Co., No. H037715, 2014 WL 255587 (Cal. Ct. App. Jan. 23, 2014). Two tenants sued to challenge their eviction by a bank that through a nonjudicial foreclosure sale purchased the property the tenants were renting. The trial court held that the eviction was not improper because the foreclosure sale extinguished the lease under California law and, therefore, the bank, as immediate successor in interest did not step into the shoes of the landlord. The trial court held that the PTFA only required the bank to give a 90-day notice to vacate the premises; the PTFA did not require the bank to assist the tenants in recovering possession of the leased premises. On appeal, the tenants challenged the trial court’s interpretation of the PTFA. The appeals court held that the PTFA causes a bona fide lease for a term to survive foreclosure through the end of the lease term, and grants only limited authority of the immediate successor in interest to terminate the lease, with proper notice, upon sale to a purchaser who intends to occupy the unit as a primary residence. The court explained that while the PTFA impliedly overrides state laws that provide less protection, it expressly allows states to retain the authority to enact greater protections. The court added that California law protects bona fide tenancies for a term that continue by operation of the PTFA, and explained that although the PTFA does not itself provide a private right of action, it can be enforced through litigation under state law claims. After finding that there were triable issues of fact, the court reversed the trial court’s order granting summary judgment to the bank and reinstated the tenants’ claims.
On August 21, Illinois enacted SB 56, which adds rights for tenants of foreclosed properties. The law provides, among other things, that the entry of a judgment of foreclosure shall not terminate or otherwise affect the rights or interest of any occupant of a dwelling unit who has a lease or tenancy resulting from an arm's length transaction and who is not the mortgagor, whether or not the occupant has been made a party in the foreclosure. The bill also provides that the holder of the certificate of sale, the holder of the deed issued pursuant to that certificate, or, if no certificate or deed was issued, the purchaser at the sale shall: (i) assume the lease or tenancy of the mortgaged real estate resulting from an arm's length transaction entered into prior to the confirmation of sale; (ii) assume any federal, state, or local housing subsidy contract for the dwelling unit for the duration of the contract or the assumed lease, whichever is shorter; (iii) assume his or her interest in the mortgaged real estate subject to the rights of any occupant; and (iv) not terminate the occupancy or any occupant's tenancy, except as otherwise allowed under state law. The law also states that a deficiency judgment may not be sought or entered against a deceased mortgagor. All of the changes take effect on November 19, 2013.