What if your landlord is foreclosed upon in California (update)?

July 1, 2009 Don Cohn, Paralegal, writes:

Under California law the bank or lender must give you a 60 day notice to vacate in writing when they officially have title to the property and they want you out in order to sell it. The new federal law supersedes the 60 day notice and increases it to 90 days notice. In addition, California law provides that tenants who hold leases are extinguished by foreclosure, with limited exceptions. For example if happened to have a lease and it was signed before the deed of trust or mortgage was recorded in the County Recorder's office, your lease would survive the foreclosure. (The idea here is that, since the bank knew about your tenancy when they loaned your landlord money, the bank or lending institution should honor your tenancy and thus be stuck with you for the duration of your lease). The new federal law now provides that all leases survive foreclosure and must be honored, except that a lease can be prematurely terminated and the tenant is then given a 90-day notice due to the fact that a purchaser seeks to occupy the premises themselves. This federal bill/law also provides similar protections to section 8 housing voucher holders. These protections go into effect immediately and sunset/expire at the end of 2012.

In many cases where the rental property is an apartment complex or multi-unit dwelling the bank or lender may encourage you to continue the tenancy and ask you to pay your rent to them instead of your previous landlord/owner. If the bank or lending institution wants you out and you are having a difficult time finding another place contact them and ask them for some extra time and make arrangements to send rental payments directly to them.

If your landlord has filed bankruptcy, contact the bankruptcy court and get in touch with the bankruptcy trustee in charge of the landlords property to get information on how this affects your tenancy, where you should pay your rent, and what will happen to your security deposit.

If you have no other choice and have to wait until the last minute to move because you cannot find another place the law (Sec.1946 of California code) still applies in that after the landlord new owner, bank, or lending institution gives you a 90 day written notice and you don't comply, their second step must be to sue you in court. The landlord new owner, bank, or lending institution cannot legally walk into your dwelling and physically remove you, or lock you out, if you do not comply with the written 90 day notice. He/she must go through the courts.

The important thing to remember is that the written notice is only the first step. Thereafter they must file a lawsuit in court (called an Unlawful Detainer) and serve you with legal papers called the Summons and Complaint and thereafter get a court order (called a Writ of Possession). They cannot evict you without first taking these steps. (Sec.789.3 of California Code) In addition they cannot turn off your utilities, prevent you from entering your place by locking you out, remove the outside door or any windows with the intention of making you move or illegally remove your personal property from the premises. If he/she does these prohibited actions and you go to court, you can receive actual damages plus reasonable attorney's fees and up to $100 for each day of the violation.

If you decide not to comply with the 90 day notice and your landlord sues to evict you, you should talk to an attorney or a registered non-attorney unlawful detainer assistant, and do it fast. In most of these suits, you will have only five days to answer the complaint or a decision may be entered against you without an opportunity to defend the eviction in court. If you don't respond, (or if you respond and lose), you may find the sheriff or Marshall will remove you from the premises after giving you a final five day notice to leave called a Writ of Execution. Keep in mind that Unlawful Detainer suits, although masked/withheld form creditors by the court for 60 days, eventually find their way on to your personal credit record.

Some California cities have local laws prohibiting foreclosure evictions. The new federal protections do not preempt these laws and in such a case these local laws will remain in full force.

Donald Cohn/ Paralegal

Tenant/Landlord Education, Mediation and Fair Housing

Petaluma People Services Center

1500 Petaluma Blvd. South/ Suite A

Petaluma, CA. 94952

707-765-8488 FAX 707-765-8482