Appellate court recognizes tenant protections of Federal Protecting Tenants at Foreclosure Act

In a June 28, 2013 ruling, the second division of the Illinois Appellate Court for the First District reversed a lower court ruling granting summary judgment to a foreclosing bank evicting a tenant who had a bona fide lease.  In Fifth Third Mortgage Company v. Foster, a foreclosing bank served a 90 day notice on an occupying tenant pursuant to section 702(a)(2) of the Federal Protecting Tenants at Foreclosure Act (PTFA) stating that the tenant would have to vacate within 90 days unless the tenant provided evidence to the landlord that the tenant was a bona fide tenant under the PTFA.

After the 90 day period expired, the bank filed its eviction lawsuit.  The defendant appeared in the case.  The bank brought and won a motion for summary judgment.  The appellate court reversed the lower court indicating that the tenant did, in fact, have a lease that had a termination date after the case had been filed.  As such, the appellate court ruled that the circuit court lacked subject matter jurisdiction over the case and could not proceed at the time it filed its action.

So basically, the appellate court indicated that Section 702 off the PTFA works the way we think it is supposed to work.  A tenant with a bona fide lease gets to stay to the end of the lease (provided they comply with the lease terms!)  But the case also helps point out just how logistically difficult and tricky it can be to work in post-foreclosure matters related to the PTFA.  Many landlords don’t have all of the facts necessary to make a determination of what to do and a landlord can be blindsided by a tenant who later produces a lease.