Residential tenants in New York and most other states used to have their leases extinguished at foreclosure and could be evicted by the new owners. The Protecting Tenants at Foreclosure Act (PTFA) provides residential tenants with new protections when landlords lose rental units to foreclosure of federally related mortgages.

Tenants living in foreclosed rental units must be given a minimum 90-day pre-eviction notice after the buyer takes legal title from the foreclosure referee.

PTFA protects tenants:

(a) with month-to-month leases;
(b) with leases terminable at-will;
(c) without formal leases but verifiable rent payment history, and;
(d) with Section 8 leases and subsidy contracts

However, if the tenant has more than 90 days remaining on the lease, the tenant must be allowed to stay until the lease ends, unless the buyer will occupy the property as a primary residence.

Protections are limited to “bona fide” leases in which:

1) the tenant is not the mortgagor, the mortgagor’s child, spouse, or parent;
2) the lease is the result of an arms-length transaction, and;
3) the rent is not substantially less than market rent, unless reduced by a subsidy.

Federally related mortgages are those:

(a) insured, regulated, guaranteed, supplemented or assisted by the federal government or;
(b) intended to be sold to the Federal National Mortgage Association, the Government National Mortgage Association or the Federal Home Loan Mortgage Corporation.