Court Decision Exposes Lenders to Law Suits
April 21, 2014
A court victory by residential tenants against a trustee at foreclosure may engender further law suits against lenders and other successors. In Nativi v. Deutsche Bank, the bank (in its capacity as trustee) was found liable to tenants in part for the actions of the prior owner/landlord. Under the Nativi court’s interpretation of a 2009 federal law that protects tenant rights post foreclosure (Protecting Tenants at Foreclosure Act), the entirety of residential leases survives foreclosure, not just the bare right of tenant to occupy the premises for the duration of the lease term. The successor’s liability could include accrued tenant claims against the former landlord and options to extend or to purchase. See CBA’s Regulatory Compliance Bulletin for more information.