TENANTS LEGAL CENTER
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. 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As originally enacted by the first version of this Federal Law, the term "Notice of Foreclosure" was vague.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."
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.
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.
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 still 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 Federal, or State 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 these laws, you may not be a tenant under a lease, or a guest or even a licensee.
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.