Legal Question in Landlord & Tenant Law in California

There is a temporary federal renters in foreclosure law in place that protects you. Once the house is sold at foreclosure, the new owners must give you until the end of your lease or 90-days, whichever is LONGER. In order to avail yourself of that protection, however, you must attorn (uh-TURN) to the new owner, which is fancy french-based legalese meaning your obligations to the new owner must be fulfilled exactly the same as the original lessor. Breach your lease and you lose all the protection.

To give you specific advice on this situation, it would be necessary to review your lease and many more facts; however, as a general rule buyers of homes at foreclosure auction are now required to provide at a minimum 90 days notice to vacate the property after the foreclosure sale. In some cases, the buyer at the foreclosure auction may be required to honor the balance of the term of your lease. You will want to review the Protecting Tenants at Foreclosure Act of 2009, which is a federal law and imposes new requirements on banks and persons buying homes in foreclosure that are already occupied by a bona fide tenant. As your lease has only three months remaining on its term, then you have only the legal expection of living there for another 90 days. Beyond the term of your lease, you have no rights to remain in the home, and so unless the bank foreclosed the property yesterday, they are probably only going to give you a 90 day notice, and that's all the remaining time you will have in the property. Even if you "intended" to stay in the home after the one year lease is up, you have no legal right to expect to be able to do so.

Should you stop paying rent? Only if you want to be evicted by the current landlord. Just because the landlord stopped paying the mortgage does not excuse you from paying rent, except in very, very limited circumstances. If you are receiving the benefit of living in the property, then you have the obligation to pay the rent. The good news is that if the bank winds up with the home at the foreclosure sale, they generally will offer "cash for keys" in order to get you to move before the end of the 90 days. This is not anything connected with any law - it is a completely voluntary offer on the part of the bank, and depending on who buys the home at foreclosure, they may offer you nothing, and just give you a 90 day notice and an address to which you must now pay rent. Be sure to document rent you pay from now until the foreclosure.

Further, the landlord has an obligation to return your security deposit within 21 days of the foreclosure sale without deduction (except any unpaid rent through that day). They cannot deduct for cleaning, damage or repairs because they no longer own the property and will not perform any repairs to the property. The bank, or whomever buys the home at foreclosure, is not responsible for the security deposit unless the current landlord can prove that he or she paid it over to the new owner post-foreclosure.

Finally, is there any basis to sue the landlord? It depends - if you get to live in the property through the balance of the lease term, then what would your damages be? Unless you are displaced early (and not compensated for it), then I'm not clear on what the legal theory of recovery against the landlord might be. I'm sure someone more creative than I can come up with some theory by which you can sue, but you have to think of it in these terms - just because the property will have a new owner at the foreclosure, what does it matter to you and your tenancy. If you get to remain in the property through 09/30/2010, how are you damaged? In fact, you might receive some money from the bank to move early, so you are probably enriched by the whole mess.

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