Ask the County Law Librarian – Renters’ Rights in Foreclosures
Q. I have been renting a house for more than a year. I just got a notice that the house will be sold at auction at the end of this month. Do I have to move out then? That’s not nearly enough time to find a new place! And do I have to pay this month’s rent? I will need the money for a deposit on a new place. -Allan
A. Don’t worry – you will not have to move out at the end of the month. Exactly how long you have depends on who buys the property at auction, and whether your lease is month-to-month or until a certain date, but you will get at least 90 days notice. The trustee’s sale may even be delayed – this frequently happens. But you do have to keep paying rent!
With all the foreclosures going on, this situation is pretty common. When the mortgage crisis started, tenants were caught in a real bind – foreclosure wiped out any leases that were signed after the loan was taken out, and the new owner could evict them on 60 days notice.
This caused so much hardship that a new federal law was passed protecting tenants: the “Protecting Tenants at Foreclosure Act of 2009” (Pub. L. no. 111-22, 123 Stat 1660 (2009)). This law expires on December 31, 2012, unless Congress extends it before then.
Under this law, if the mortgage loan is “federally related” (almost all are), the lease survives the foreclosure. This means that the tenant can stay until the end of the lease. Month-to-month tenants must get 90 days’ notice before eviction. The law doesn’t apply to tenants who are close relatives of the former owner who got a sweetheart deal for below-market rent.
There is an exception for buyers who plan to move in to the home themselves. In this case, the lease ends, but the tenants are still entitled to give 90 days’ notice.
So if your lease extends until a certain date, and the property becomes bank-owned, you are set until the end of the lease. If your lease is month-to-month, the bank must give you at least 90 days notice to move out. If the buyer plans to live in the home, you must receive 90 days notice to move out.
You do still have to pay rent though! You can still be evicted for cause, including non-payment of rent. Starting on the day of sale, rent should be paid to the new owner. If you have a security deposit, the new owner should also be responsible to return it when you leave.
For more information, read the Nolo article “Tenants in Foreclosure: What Are Their Rights?” or the Nolo Press book “California Tenant’s Rights.” The California non-profit group Tenants Together sponsors a “Foreclosure Rights Hotline” at 1-888-495-8020. Housing and Economic Rights Advocates has a more extensive list of tenants’ rights in foreclosure, including discussions of cash for keys, right to maintenance, and more.
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