Legal Question in Landlord & Tenant Law in California
A bankrupt landlord is short selling the property we are renting. We are afraid our damage deposit will not be refunded, even if there are no damage claims. Can we place a lien on the property before the short sale is finalized? This is in California.
1 Answer from Attorneys
You cannot place a lien against his property unless you file a lawsuit, obtain a judgment and then record what is referred to as an "Abstract of Judgment." In the sale of the property, generally one of two things happens. Either the landlord (current) refunds you the security deposit, and notifies the new buyer of having done so. That is almost certainly not going to happen here. Second, and more likely, is that in the process of buying the property, the buyers are assuming responsibility for the security deposit given to the prior landlord. When you move, the new landlord is generally going to be held liable for the security deposit given to the prior landlord. Make sure you have some proof of having paid the security deposit - like a canceled check, or your lease signed by you and the landlord with the security deposit receipt acknowledged. You may also be asked to sign a "Tenant Estoppel Certificate," which is your statement to the new buyer of the property that you have no claims against the current landlord. In that Estoppel, be sure to indicate the security deposit the current landlord holds. One question - when you say that the landlord is bankrupt, if you mean he has actually filed bankruptcy, then you should consult with a bankruptcy attorney to see what you can do to preserve your rights, if any as to him.
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