Legal Question in Real Estate Law in California

It's not surprising that you are receiving a lot of conflicting answers. This is an area of law that is developing and transforming so rapidly, there isn't a lot of guidance yet in terms of actual case-law covering the series of new laws enacted at both a federal and state level. Now, what the law says a lender must do, and what they actually do are two different things, so you may find yourself defending an eviction irrespective of whether you are right or wrong.

First, with respect to the Obama law, I think you have to re-read the first sentence. Its not well written, but from talking to a number of attorneys in Orange County who represent banks post-foreclosure, they all are of the opinion that the law applies to any residential property regardless of who the mortgage holder happens to be. There is a big "or" right after the words "federally related mortgage loan" which most have read to include "any dwelling or residential property." As such, I think you will find that you will be treated under the Obama law.

Second, the sixty day notice is a state law provision, enacted last year in an effort to give tenants more time. The Federal Obama law is preemptive - in other words, it "trumps" the state law provision that would only give you sixty days. Unless one of the homeowners is living in the home with you at the time of foreclosure, you should be given a 90 day notice.

Finally, as to a "move in owner immediately," if someone other than the bank buys the property at foreclosure sale, he or she still has to give you 90 days notice. The law is applicable to anyone who purchases the property at a foreclosure sale. The applicable language that imposes this on anyone who buys the property is "any immediate successor in interest" - meaning anyone who acquires the property at foreclosure must give a bona fide tenant the proper notice. Now, the issue is will they? Depends, but if you know this much, you can at least fight them if they try to get you out sooner. I've had a lot of calls from tenants who have been given a three day notice to quit (intended for an owner who holds-over after foreclosure), and banks generally acknowledge and correct their mistake, but investors who buy properties at foreclosure tend to be more aggressive.

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I have not had the opportunity to discuss the Federal 90-day notice law with foreclosing lenders as Mr. Gibbs has, but I do have a comment. Although the loans may not be FHA or Freddie Mac or Ginny Mae, perhaps all the lenders he's talking with are Federally-regulated banks. In such a case, the Federal nexus giving the Congress and President the power to pass such laws has to do with the lenders, rather than the loans.

There is always a Constitutional limit on what the Federal government can legislate. The government in Washington has only the powers granted to it under the Constitution; all others are reserved to the states, or the people. The Constitution specifically authorizes Federal authority over banks and banking. However, it is very doubtful that Congess has the power to pass laws regulating private lenders.

If the owner is being foreclosed upon (for example) by some partnership of investors, not licensed or regulated by Uncle Sam, I'm pretty sure that the Federal law does not apply

In addition, I think the application of the law to Federal-nexus lenders may be coercive rather than absolute. The Constitution also specifically prohibits Congress from making any law that impairs the obligation of contracts. This would seem to include a prohibition on altering the terms of a note and deed of trust after they are made. However, the Feds can effectively enforce the 90-day law by telling the Federally-licensed bank, "If you enforce this contract contrary to our wishes, we can revoke your license." That has the desired effect without actually impairing the contract.

These are thoughts off the top of my head. I'd be interested to hear others' views.