10.5 Sale or Foreclosure

A lease does not bind or affect third parties unless it is filed for registry in the office of the parish recorder for the parish where the immovable is located,1  the third party assumed the lease in the act of sale or purchase agreement,2  or the third party purchased the property at a foreclosure sale.3  An unrecorded lease may also be ratified if the new owner allows the tenant to remain and accepts rent for a time.4  If the third-party purchaser of the property evicts a tenant prior to expiration of an unrecorded lease, the tenant may have a damages action against the original landlord.5

The Protecting Tenants at Foreclosure Act (“PTFA”) provides protections for bona fide tenants who reside in properties that have been foreclosed on. The PTFA requires that the immediate successor in interest to the foreclosed owner (typically the mortgage company or third-party purchaser at foreclosure sale) allow a bona fide tenant to occupy the premises until the end of their lease, unless the successor in interest intends to occupy the unit as a primary residence. In that case, or in the case of a month-to-month lease, the successor in interest must provide at least 90 days’ written notice to vacate.6  A defective notice to vacate, e.g., a 5-day notice to vacate, may not be cured by the mere passage of time.7  Courts are divided on which party carries the burden of proving that the tenant is, or is not, a bona fide tenant as defined by the PTFA.8  The PTFA expressly states that tenants whose rents are reduced by a subsidy are protected “bona fide tenants” even though they don’t pay fair market rent.9  A federal PTFA defense is not a basis for removal of the eviction to federal court, rather it is a state court eviction defense.10  Although the PTFA expired in 2014, Congress permanently reenacted the PTFA in 2018 in § 304 of the Economic Growth Act.11

In the case of foreclosure, La. C.C.P. art. 2293(B)(2)–(3) requires the sheriff to serve a written notice of seizure on tenants and occupants when the landlord’s property has been seized by a creditor. The sheriff’s failure to serve this notice prevents the purchaser of the property from using a La. R.S. 13:4346 ex parte writ of possession to evict or eject occupants or tenants. However, the sheriff’s failure does not affect the rights of the purchaser or foreclosing creditor to use the eviction procedures in La. C.C.P. art. 4701, et seq., which require a 5-day notice to vacate and a rule of possession. An owner in foreclosure is required to notify tenants of the foreclosure within seven days of being served with a notice of seizure and may be subject to a $200 penalty for failure to do so.12

• 1La. C.C. art. 2681, 2712, 1839; La. R.S. 9:2721. But see Restaurant Indigo v. Thompson, 98-2704 (La. App. 4 Cir. 05/19/99), 733 So. 2d 1271 (where recorded lease was expired on its face, and renewal was not recorded, lease was not binding on third party).
• 2Stanley v. Orkin Exterminating Co., 360 So. 2d 225 (La. App. 1 Cir. 1978).
• 312 U.S.C. § 5220 note.
• 4La. C.C. art. 1843; see Means v. Comcast, Inc., 44,503 (La. App. 2 Cir. 08/19/09), 17 So. 3d 1012, 1014–15.
• 5La. C.C. art. 2712.
• 612 U.S.C. § 5220 note; Bank of N.Y. Mellon v. De Meo, 254 P.3d 1138 (Ariz. Ct. App. 2011); Curtis v. U.S. Bank Nat’l Ass’n, 50 A.3d 558 (Md. 2012); Joel v. HSBC Bank N.A., 420 F. App’x 928, 931 (11th Cir. 2011) (month-to-month tenant entitled to 90-days notice under Protecting Tenants at Foreclosure Act); see Off. of the Comptroller of the Currency, Protecting Tenants at Foreclosure Act (2020).
• 7Bank of N.Y. Mellon, 254 P.3d 1138; Curtis, 50 A.3d 558.
• 8Fontaine v. Deutsche Bank Nat. Tr. Co., 372 S.W.3d 257, 261 (Tex. App. 2012) (finding no authority for tenant carrying burden of proof); Bank of Am., N.A. v. Owens, 28 Misc. 3d 328, 334, 903 N.Y.S.2d 667, 671 (City Ct. 2010) (landlord carries burden); Customer’s Bank v. Boxer, No. SNSP40178, 2013 WL 1010747, at *5 (Conn. Super. Ct. Feb. 28, 2013) (tenant carries burden), aff’d, 84 A.3d 1256 (2014); In re Figuera, No. 14-21730-A-7, 2014 WL 4923078, at *5 (Bankr. E.D. Cal. July 28, 2014) (tenant carries burden).
• 912 U.S.C. § 5220 note § b(3).
• 10Wells Fargo Bank v. Hines, No. 2:12-cv-1683, 2012 WL 2467024 (E.D. Cal. June 27, 2012). However, a PFTA defense may arise as an issue in bankruptcy if the landlord’s foreclosing mortgage company seeks to lift the stay in order to evict.
• 11Pub. L. 115-174, 132 Stat. 1296 (2018), codified at 12 U.S.C. § 5220 note.
• 12La. R.S. 9:3260.1.