Legal Question in Real Estate Law in California

Re: Tenants and Foreclosure

I agree that your rights are probably very minimal. You appear to be misinformed. However, there is one rarely-occurring exception to Mr. Gibbs' rule that a tenant's right is wiped out by foreclosure. If the lease were made before the the foreclosed lien, and the lienholder had notice of the lease (either because the lease was recorded or because the lienholder was on constructive notice of your tenancy, your lease would (or at least could) be superior to the lien, and your leasehold interest would not be wiped out.

An example might be if you signed a five-year lease on 1/1/2006, and the lien arose from a deed of trust recorded on, say, 7/1/2007. It would also be necessary that either (a) you recorded your lease or a memorandum thereof, and/or (b) your tenancy was obvious to a lender that checked out the ocndition, status, use, etc. of the property.

A tenant's situation in a foreclosure is ordinarily, however, as Mr. Gibbs describes, and it is a much weaker position than that of a tenant where a property voluntarily changes hands, in which case the lease survives and all that really happens is that the tenant gets a new landlord.

Re: Tenants and Foreclosure

I'm not sure where you got your information, but your rights are extremely minimal in this situation. Any lease agreement you had with the owner who was foreclosed has been extinguished, and your only remaining right is to remain in the property until the expiration of a sixty day notice to quit that the bank has or will be giving you soon. A lease is an interest in real property, but it is subordinate to the Deed of Trust under which the bank foreclosed. As such, it is wiped-out by the foreclosure. You have some rights in terms of an action against the former owner for breach of the lease, but the bank can evict you after giving you a sixty day notice to quit.

In terms of the cash for keys, they ARE doing you a favor. There is nothing in the law that says they have to do that, and in fact, if they waited the sixty day notice out, they would have to give you nothing. They offer people cash for keys to get the property into their inventory and on the market sooner than the sixty days plus a few weeks for an eviction, but if you don't cooperate, they can simply proceed to evict you. Sadly, they can dictate whatever they want, and if you don't like it, they will have you out after sixty days. I'd suggest that you may want to become more flexible in your negotiations with them and understand you will not be staying through the end of the lease.

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