Resource Center

In the Protecting Tenants at Foreclosure Act, Pub. L. No. 111-22, §§ 701-704, Congress provided that purchasers of property at foreclosure take subject to existing leases and must provide tenants, including Section 8 voucher tenants, with a 90-day notice prior to eviction. In addition, the law provides Section 8 voucher tenants with additional protections. When there is a Section 8 tenancy, the new owner takes subject not only to the Section 8 voucher lease but also the Section 8 Housing Assistance Payments (HAP) contract. During the term of the lease, the new owner may not use the foreclosure to evict the residents because it does not constitute good cause, except if the new owner intends to occupy the unit as a primary residence and provides the tenant a notice to vacate at least 90 days before the effective date of such notice.

The American Recovery and Rehabilitation Act of 2009 (ARRA) provides that the initial successor in interest of a foreclosed property assisted with Neighborhood Stabilization Program (NSP) funds takes subject to existing leases, including Section 8 voucher leases, and must provide a tenant with a 90-notice prior to eviction. ARRA has additional protections for Section 8 voucher tenants. First, the recipient of the NSP funds may not refuse to lease the NSP assisted unit to a Section 8 Housing Choice Voucher Program participant because of the participant’s status as a voucher holder. Second, an entity acquiring property with NSP funds takes subject to the HAP contract between the housing authority and the former owner. The desire of the acquiring entity to have the property vacant prior to selling it will only be considered good cause for eviction under 42 U.S.C. § 1437f(o)(7) if the property is unmarketable if occupied or the subsequent purchaser wants the unit for personal or family use. Under ARRA if the PHA is unable to pay its share of rent to the entity taking title at foreclosure, the PHA may use that rent money to pay unpaid owner-supplied utilities, and/or to pay reasonable moving costs and a new security deposit.

The policies adopted by Fannie Mae and Freddie Mac also address the issue of offering to continue to lease to Section 8 tenants.

Project-based Section 8 tenants are not subject to Section 703 of the Protecting Tenants at Foreclosure Act. However, such tenants are protected by Section 702. A new owner takes title subject to the Section 8 lease, which provides that a tenant may not be evicted except for good cause. Good cause includes tenant misbehavior, but does not include a business reason, such as foreclosure. Many Section 8 Housing Assistance Payment (HAP) contracts provide that the HAP contract continues in effect after foreclosure.