Buying a foreclosure with Tenants in place

So I have a broker in Arizona that I used to work for. She is very sharp. She has had her attorneys review the act (I pasted it below in it's original form). READ ALL THE WAY TO THE BOTTOM because I have posted her attorneys interpretation of this as well.


TITLE VII—PROTECTING TENANTS AT
FORECLOSURE ACT
SEC. 701. SHORT TITLE.
This title may be cited as the “Protecting Tenants at Foreclosure Act of
2009”.
SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING
TENANCY.
(a) IN GENERAL.—In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date ofenactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to—
(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and
(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure—
(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or
(B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1),
except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.
(b) BONA FIDE LEASE OR TENANCY.—For purposes of this section, a lease or tenancy shall be considered bona fide only if—
(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length transaction; and
(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy.
(c) DEFINITION.—For purposes of this section, the term “federally related mortgage loan” has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602).


Her is the opinion of her attorneys on HOW this will be applied:


***ATTENTION***
NEW LAW REGARDING FORECLOSURE PURCHASES
On May 20, 2009 President Obama signed a federal law which is intended to govern the rights of tenants subsequent to a foreclosure. While we have been unable to obtain a copy of the final language that was signed into law, it appears that the drafts of the statute give certain rights to tenants (not the former owner) of properties that were foreclosed. (There are several copies available by completing an internet search; however, the statute is unavailable on a governmental website). NOTE: we are giving you our understanding based upon a consensus of drafts of this new law. We will continue to post what appears to be the most current version of the law at Federal Law.
Under the new law the following rules apply if you purchase a foreclosed property where there was a "Bona Fide" Tenant in the property before the Notice of Sale:
1. You have to honor the Tenant’s lease, unless you are purchasing the home to occupy as your primary residence then 90 day notice of termination required.
2. If the Tenant has no lease, but is month to month or otherwise, 90 day notice of termination required.
A "Bona Fide" Lease or Tenancy is one where the Tenant is not the mortgagor, or his/her child, spouse, or parent, is an arms length transaction, and the rent is not substantially less than fair market rent.
Prior to this enactment, in Arizona, purchasers of property at trustee’s sale took the property subject only to higher lien holders and terminate the rights of any tenants pursuant to A.R.S. § 33-811 (E). The new federal law intends to override the state statutes and govern the rights of purchasers of property after a foreclosure. Therefore, as provided therein, a purchaser may not be able to obtain immediate possession from a tenant in a foreclosed property.
A legal analysis of the new law raises several concerns: 1) that this federal law impermissibly impedes on the rights of the States, the real property rights of individuals, and therefore the new law is unconstitutional, and 2) that the federal law is inapplicable to properties purchased at trustee’s sales because in Arizona "Foreclosure" is a term that refers to Judicial sales not Trustee Sales. However, it will be many months until we receive court decisions on these issues.
For now, you need to understand that if you purchase a foreclosed home which is occupied by a "Bona Fide" Tenant, you will likely have to honor the lease, or at a minimum give the tenant a 90 day termination notice. Therefore, if you file an eviction against the former owner (mortgagor) based upon a demand for possession, your case may be dismissed if the court determines that a bona fide tenant occupies the property and the 90 day notice has not been given or if the tenant resides in the property pursuant to an unexpired lease.
This information is intended to give general information regarding a change in the law, it is not intended as legal advice in any specific matter.