Legal Question in Real Estate Law in California

Re: foreclosure

The generally-accepted viewpoint is that if you signed a lease to pay, for example, $1000 a month rent, and you are still getting the benefits because you haven't been evicted yet, you have a legal duty to abide by the lease and the landlord's problems with his lender are none of your business. However, there is also a legal point of view, entitled to some weight, that a lease contains a covenant of "quiet enjoyment" that is breached when the landlord can no longer assure the tenant of continued, unchallenged possession of the premises. ("Quiet enjoyment" has nothing to do with neighbors playing loud music; it is all about freedom from legal challenges to the tenant's right of possession). Breach of the implied covenant of quiet enjoyment is a possible ground for the tenant to suspend payment of rent, at least in advance.

Nevertheless, the law won't give the tenant a "freebie" in the overall long run; if you are in Apartment A for 10.65 months, you will eventually have to pay someone for 10.65 months' rent, probably less any costs you incurred due to having to move out early under threat of eviction from the new owner. I think as a practical matter most tenants will be better off paying the old landlord right up until the foreclosure sale date, but if there is a security deposit that might get swallowed in the process and there is no damage to the place for which the deposit rightfully may be tapped, then maybe it is OK to cut the defaulting landlord off a bit earlier.

Also keep in mind that the buyer at the foreclosure sale may be an investor who would like to have a good tenant already in place, and your payment record might play a role in whether you can stay on; also, you want to protect your credit rating.

There is no harm in having a frank discussion of rent and security deposit issues with the defaulting landlord. Make him, her or it justify continuing to pay. A landlord who is about to get foreclosed upon is not real likely to start an eviction proceeding.

Re: foreclosure

Hey, guess what - you get to pay rent until the foreclosure sale actually takes place. Unless the landlord is liable for rent skimming (search this board for the prior discussions about it), he owns the property, you are living in it under a lease, and you are liable to pay him the rent until he no longer owns it. Unless you have a term lease that will be terminated by this foreclosure, you are a month-to-month tenant, and will receive a sixty day notice when the bank takes over the property to leave. That means you are really not harmed by the owner's financial decision not to continue paying a mortgage he probably couldn't afford, as the landlord could have given you a sixty day notice at any time and terminated your tenancy.

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