MORE FORECLOSURE TROUBLES FOR BANKS

Banks Must Give 90 Days Written Notice
Before An Eviction Action

When a bank forecloses on property, the legal issues that follow can be sticky.  I frequently get questions about a bank’s obligation toward a tenant following a foreclosure.  The scenario is as follows:  Tenant is paying his/her rent every month.  The landlord is not paying the mortgage every month.  The landlord falls in default and the bank forecloses.  That is when the problems start.  The bank's goal is to evict the tenant as soon as possible, while the tenant wishes to stay in the property. 

So what are the tenant's rights and the bank's obligation following a foreclosure?  After a foreclosure, the tenant has the right to stay in the property 90 days following written notice from the bank informing the tenant that they will be evicted in 90 days.  It is not enough that the bank simply wait 90 days to foreclose.  The bank must provide written notice that the tenant has 90 days to vacate the property before an eviction action is filed. 

This point of law was confirmed in the case of Bank of New York Melon v. Patricia de Meo, which was decided by the Arizona Court of Appeals in May 2011.  In this matter, the bank foreclosed on the landlord and one day later the bank provided a standard five-day written notice for the tenant to vacate the property.  Thereafter, the bank waited 90 days prior to bringing an action for forcible detainer.  The Court of Appeals ruled that the trial court erred in evicting the tenant because the bank failed to provide a 90-day written notice to vacate.

The lesson to foreclosing banks is that it is not enough to provide the standard five-day notice provided in the Arizona Landlord-Tenant Act.  The bank must provide a 90 day written notice.  It is also not enough that a bank simply wait 90 days prior to filing the action.  The lesson to a tenant is that he/she need not vacate after 90 days.  A tenant must only vacate after receiving 90 days written notice of termination. 

If you are a tenant or bank and in need of a landlord-tenant attorney, I urge you to contact me where I can make a proper recommendation for your needs.