TENANTS LEGAL CENTER
OF SAN DIEGO

Foreclosures

            

Foreclosures
(and evictions)

Owners

Consumer Warning

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TENANTS

EVICTIONS  Do not be intimidated with the threat of an eviction.  You do have rights and we can help.

WHAT HAPPENS TO THE RENTAL AGREEMENT?

Your rights as tenants in a foreclosed property vary depending on the situation.  You have rights under Federal, and State Law AB 2610- including Code of Civil Procedure section 1161b.  Your residential rental agreement/lease may be able to survive a foreclosure.  There may be limited exceptions but these must be viewed on a case by case method.  Commercial leases are handled on a different basis outside of these residential protection laws. 

Under these laws, certain residential leases may remain valid even after a foreclosure.  Federal law now protects residential leases entered into before "the notice of foreclosure".   The Federal law is set to expire 12/31/2014 unless extended.  The State law is set to expire 12/31/2019 unless extended.

As originally enacted by the first version of this Federal Law, the term "Notice of Foreclosure" was vague.  It was important since that law protected leases entered prior to that date.  At the Tenants Legal Center, we claimed the  "foreclosure" notice was the latest NOTICE OF TRUSTEE SALE which would have protected more leases before that notice.  The banks claimed it was the first NOTICE OF DEFAULT reducing the number of leases protected.  The Federal Law has been amended to clarify the situation for the  benefit of the tenant.  The "Notice of Foreclosure" is now clarified to mean when title actually passes from a foreclosure sale.  The protections of the Federal Law, as amended and clarified, will include all leases entered into prior to title passing as potentially being covered under the law.  State law follows this protection by defining the lease protected as being entered into before "...the transfer of title."


WHAT TO DO ABOUT PAYING RENT

When a mortgage goes into default, the landlord may still have the right to claim rent all the way up to a trustee sale (losing the property)  That right is subject to landlord tenant laws.  When the trustee sale is imminent, it is important to seek legal advice on how to protect your rights before withholding rent.  Many landlords take action to try and save the property and prevent the trustee sale.  Once the trustee sale occurs, tenants should no longer pay the former owner (ex landlord) since they no longer own the property. 

WHAT TO DO IF YOU NEED MORE TIME TO MOVE

As a tenant in a foreclosed home, you may be allowed to remain through the lease term or you may be asked to move in as little as 60 or 90 days.  In many cases you can gain additional time to relocate or perhaps you would like to try and buy the home for a reduced price before moving.  For many tenants, this could be a golden opportunity. 
We can help.  We can stop the process, lawfully defending your rights and give you that valuable extra time you may need.  Do not be intimidated by any paperwork regarding eviction.  You are not to blame for being caught in the middle between the bank/lender and your landlord.  Do not let the situation become any worse.  Seek legal advice to protect your rights before considering moving out.  Do not simply listen to the bank or new owner's advice.  They are only interested in their "new" property and not you or your family.

TENANT'S RIGHTS AGAINST FORMER LANDLORD

Be sure to tell the former Landlord/owner that you expect the lawful accounting and refund of your security deposit.  If you were forced out during a lease, you may have a valuable claim for the landlord's breach of that lease along with fraud if they intended to lose the property but concealed that from you when you signed the lease.  You may be allowed to remain under that lease but you may still have claims against that former landlord.

CHECKING THE LANDLORDS CREDIT

With so many foreclosures, it may be a good idea to check the credit of landlords before renting.  Some landlords who face foreclosure will rent the home to unsuspecting tenants collecting rent all the way to losing the home at a foreclosure sale.  They collect rent but do not pay the mortgage since they are planning to let the home go.  The problem is that the tenants do not know about the owner's plans and think they are leasing a secure home.  Tenants can actually research the risk of foreclosure before renting and moving in.  You should check your local County Recorder's office to check on the status of a piece of property you wish to rent (or are already renting).  Anyone can access public records in San Diego to see if there is a NOTICE OF DEFAULT (NOD)  on the property.  Once one of these is issued, the owner has a limited time to cure the default before the sale.  Clearly, tenants who discover a NOD should understand that beginning to or continuing to rent that home carries the risk of being evicted by the lender after a foreclosure.  As property values rise, it will be more likely that landlords will make every effort to avoid a foreclosure, especially if there is increasing value in the property.

TENANT'S RIGHTS AFFECTED BY FORECLOSURE SALE

You have different rights occupying a home lost to a foreclosure depending if you come under the protections of applicable law.  Under some conditions, you may be asked to vacate at the end of the lease or with a 90 day notice under some conditions. If you do NOT qualify under either State or Federal law, you may not be a tenant under a lease, or a guest or even a licensee and you may be asked to vacate. 

As a tenant renting from a foreclosed landlord, your tenant status will, in most cases, be changed.  Be cautious of paying any rent after a foreclosure since you may be paying a former owner who has no right to any rent or you may be paying someone claiming to be the new owner who is really not.  Remember, do not guess in such matters, seek advice to protect your rights!

CONSUMER WARNING

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California law for San Diego is applied in these pages.  Such laws may or may not be applicable in other jurisdictions.  The information provided herein is of a general nature and is not intended to be taken as specific legal advice.  For legal advice in a particular situation, promptly consult with an appropriate attorney.