LANDLORD-TENANT LAW
Foreclosures
TENANTS
WHAT HAPPENS TO THE RENTAL AGREEMENT?
Your rights as tenants in a foreclosed property vary depending on the situation. Your rental agreement/lease will usually be wiped out after a foreclosure. There may be limited exceptions but these must be viewed on a case by case method.
WHAT TO DO ABOUT PAYING RENT
When a mortgage goes into default, the landlord still has the right to collect rent all the way up to a trustee sale (losing the property) He/she may have to pay that money over to the lender while in default but that does not affect the tenant's duty to pay rent. When the trustee sale is imminent, it is important to seek legal advice on how to protect your rights before withholding rent. Keep in mind that many landlords take action to 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 will have to move but 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. These matters can be handled using the banks eviction papers even if your name is not on them. Remember, this situation is not your fault. 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.
TENANT'S RIGHTS AGAINST FORMER LANDLORD
Be sure to tell the former Landlord/owner that you expect the refund of your security deposit, less any rent you may still owe them. 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.
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. These tenants become victims because they leased a home on the edge of foreclosure which will lead to their eviction, regardless of the lease. Tenants can actually research the risk of foreclosure before renting and moving in. Anyone can access public records to see if there is a NOTICE OF DEFAULT (NOD) on the property. Once one of these is issued, the owner has 180 days 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. Innocent tenants displaced by a foreclosure may make a claim against the owner for breach of the lease and perhaps even a claim for damages based on fraud.
LIMITED RIGHTS (FORMER OWNERS AND TENANTS)
You may have very limited rights occupying a home lost to a foreclosure. Generally, you will not be a "tenant" with traditional tenants rights (unless you are a tenant with a lease that survived the foreclosure). You will not be a landlord, nor a guest or even a licensee. The law considers you a trespasser.
As a former owner, you are now living in the new owner's (i.e the lender) home and they will not like that. As a tenant renting from a foreclosed landlord, your tenant status will, in most cases, be lost. (possible exception: if your lease was entered into before the foreclosed loan was created.) As a tenant, be cautious of paying any rent 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!
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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.