Georgia Woman With 30-Year "Lease Purchase" Agreement Seeks To Invoke New Federal Law Protecting Homeowners From Foreclosure Eviction

In Dalton, Georgia, the Times Free Press reports:

• When April Arrieta signed a 30-year lease-purchase agreement for a house in November 2008, she thought her family was finally home. "I told my kids we won't ever have to move again," she said. But at the beginning of June, the mother of five learned that First Georgia Banking Co. had foreclosed on her 4.5-acre property, owned by Paniagua Construction. In just a few days, the bank sent letters telling Mrs. Arrieta and her neighbor, Norma Morales, who had a similar lease-purchase arrangement with Paniagua, that they had to move soon.

• Cynthia Gibson, managing attorney for Georgia Legal Services' Dalton office, said both families may be protected by a new federal law aimed at protecting renters during foreclosure.(1) She said the women should be able to stay in their homes until their leases expire. Mrs. Arrieta has a 30-year lease and Mrs. Morales' is for one year.

• The federal law trumps Georgia law, which holds that a foreclosure ends a lease and tenants can be told to leave immediately, Ms. Gibson said. Bill Bell Jr., attorney for First Georgia Banking Co., said he doesn't think the U.S. Constitution gives federal law the power to govern contracts.

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• Ms. Gibson said she'd defend the women based on the new law. [...] There are probably more people in the same boat as Mrs. Arrieta and Mrs. Morales, Ms. Gibson said, but most renters don't yet know about the new law. "To tenants out there, if you get this letter, don't just get out," she said. "You have rights. Contact local legal aid or an attorney."

For the story, see Dalton cases test law protecting renters against foreclosure.

(1) The new Federal law, which applies to foreclosure eviction situations throughout the United States, is known as the Protecting Tenants At Foreclosure Act of 2009, which is found at Title VII of the Helping Families Save Their Homes Act of 2009. According to the new law:

• It is effective on foreclosures after May 20, 2009,
• It applies to bona fide leases entered into before notice of foreclosure,
• Tenants can occupy premises until the end of the lease, unless the purchaser will use the property as a primary residence, in which case the lease can be terminated with 90-day notice,
• Those without leases must be given a 90-day notice,
• The law expires on Dec. 31, 2012.