The Protecting Tenants at Foreclosure Act of 2009 (at Title VII of Public Law 111-22) is a new federal law that benefits tenants in foreclosed properties. It was enacted on May 21 with immediate effect (it sunsets the end of 2012). Basically, this law:

• applies to any foreclosure;
• requires the successor to the interest of the foreclosed owner to honor the lease of any bona fide tenant in the property or provide 90 days notice to vacate to any bona fide tenant;
• says that a lease or tenancy is bona fide if it was the result of an arms-length transaction, the rent is not substantially less than fair market (accounting for subsidies), and the tenant is not the mortgagor (or her child, spouse, or parent);
• makes the successor in interest subject to a Section 8 voucher tenancy and its HAP contract (the foreclosure is not good cause to terminate the voucher tenancy).

The National Housing Law Project has prepared some sample notices and letters for tenants, landlords, PHAs, and judges. Included is that the text of the Act (http://www.nlihc.org/template/page.cfm?id=227)

Concerning the law's interaction with Michigan law, here are some observations:

• for the federally mandated notice to vacate/terminate to be valid, it must have been issued after the expiration of the redemption period (before then, the vesting of the successor's interest is contingent on there not being a redemption);
• for a right to occupy under a lease until its term ends (so, beyond 90 days after expiration of the redemption period), the lease must have been entered into before the "notice of foreclosure". Given that in the case of a foreclosure by advertisement, this term has a specific meaning (see MCL 600.3208), it's probably difficult to argue that it implicates some other type of notice document. But, remember that even a bona fide tenant who moves in after the notice of foreclosure is published is still entitled to the 90 day notice;
• There's an argument that the federal law protects tenants in properties foreclosed for unpaid taxes under state law (not to mention land contract foreclosures; land contract forfeitures probably not).