Legal Question in Real Estate Law in California

Re: House went into foreclosure while renting.

How did you happen to receive and open the Notice of Default? Was it addressed to you? Presumably it came by certified mail; you should have sent it back, unopoened, if you were not the addressee. (However, it is possible that a Notice was sent to you as the tenant, as you do have an interest in the property.)

Well, as to your question, if the loan being foreclosed is senior to your lease, the foreclosure will wipe out the remainder of your lease and the buyer at foreclosure will have the right to evict you; however, they may not choose to do so, if they've bought the property for investment, they may simply become your successor landlord and you could get a new lease with the new owner (although I do note that the pre-foreclosure lookers seem to be families, if it actually goes to foreclosure the list of bidders will probably look very different - among other things, foreclosure sales are "cash").

As for your security deposit, there is an element of risk here, because the landlord may not repay you and he may not even be easy to locate if you needed to serve him. Bad-faith failure to refund security deposits carries the possibility of double damages, but a successful suit in small claims requires finding the dude so you can serve him, and that he have some money so he can pay the judgment.

I would say the foreclosure sale will terminate your obligations under the lease, since it surely also terminates your rights! Although I can't out-and-out advise you to stop paying rent, or suggest when to stop, this is certainly an option you should consider. At least, you will probably get someone's attention.