Legal Question in Real Estate Law in California

The bank is very wrong. There was a federal statute passed fairly recently that provides that if you have a month to month rental agreement, or less than 90 days left on a longer lease, you have 90 days to vacate after foreclosure. If you have more than 90 days left on a lease, you get until the end of the lease. In addition, when a new owner takes over a rental property, the former owner must either deliver the deposit to the new owner or return it to the tenants. If the former owner does not do either one, the NEW owner is jointly and severally liable for the deposit when you move out. For all of this to work, however, you do have to "atourn" to the new owner, meaning act in all respects as if they were the original landlord, specifically including paying them the rent due going forward.

Mr. McCormick is a bit mixed up in his legal analysis. First of all, if your lease was subordinate to the foreclosing deed of trust - meaning it was entered into after the owner signed the deed of trust - then the foreclosure sale terminated your lease. Title to real property which is conveyed after foreclosure by a trustee's deed relates back to the date the trust deed was executed. The title passed is that held by the trustor at the time of execution of the deed of trust. Liens which attached after the foreclosed trust deed was executed are extinguished and the purchaser takes title free of those junior or subordinate liens. (Dover Mobile Estates v. Fiber Form Products, Inc. (6th Dist. 1990) 220 Cal.App.3d 1494, 1498.)

This rule applies to tenants who have leased property which is later sold through foreclosure. A lease made before the foreclosed trust deed was executed survives the foreclosure and the purchaser takes the property subject to the lease. A subordinate lease, which was made after a trust deed was executed, is wiped out by the foreclosure of that trust deed, along with the tenant's rights and obligations under the lease. (Dover, supra, 220 Cal.App.3d at p. 1498.) If the tenant remains, he does so only as a holdover tenant. If the purchaser of the foreclosed property accepts rent from the tenant, a month-to-month tenancy is created. (Id. at p. 1501.)

(Principal Mutual Life Ins. v. Vars, Pave, McCord & Freedman (2nd Dist. 1998) 65 Cal.App.4th 1469, 1478.)

Since you have not paid new rent to the new owner, you do not have a month to month tenancy, as claimed by Mr. McCormick and he is full of horse manure. You can dig all day through the manure, but you are not going to find a pony.

The federal law that Mr. McCormick refers to off hand is a public law that was signed by President Obama last year. The Protecting Tenants in Foreclosure Act, which is Title VII of the Helping Families Save Their Homes Act of 2009, became effective May 20, 2009. It protects tenants from immediate eviction by persons or entities that became owners of residential property through the foreclosure process. Public Law No. 111-22 (Senate Bill 896). With limited exceptions, tenants with leases must be permitted to occupy the property until the end of their lease terms. At a minimum, tenants must receive 90 days� notice prior to eviction. In most cases, however, involving foreclosure of deed of trust, their is no lease remaining after foreclosure because the foreclosure sale extinguished the lease under state law.

The 90 day notice provision, however, only applies to bona fide tenancies. "For purposes of this section, a lease or tenancy shall be considered bona fide only if � (1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit�s rent is reduced or subsidized due to a Federal, State, or local subsidy." (Section 702 subd. (b).)