Legal Question in Real Estate Law in California

There is some new law requiring lenders who foreclose on certain Federally-assisted loans to honor existing bona-fide leases with tenants in the foreclosed property. I am personaly somewhat troubled by this law's constitutionality, and I also wonder how much Federal connection is necessary to bring a lender under the law's reach.

I might add (in the context of your "no fault of mine" comment) that traditionally a tenant derived his rights from the rights of the owner, and when the owner lost his rights through foreclosure, so did the tenant. This was just one of the risks of being a tenant....the tenant might be faultless, just as the buyer of stock that became worthless was faultless. Nevertheless, the tenant's rights in the property could be no greater than those of the owner and landlord.

Also, a lease that is senior on the public record to a loan will survive foreclosure of the loan, and a buyer at a foreclosure would acquire the property subject to the lease and subject to all of the lessee's rights. This is not very common because (a) loans tend to predate leases, and (b) not very many leases are recorded.

You should do some on-line research into the new law giving tenants with leases the right to keep their leaseholds despite foreclosure against the landlord. I think you will come out OK.

I respectfully disagree some of my colleague�s comments. The law passed by Congress and signed by President Obama in May of 2009 provides protections for tenants whose landlords fall into foreclosure. Under the Helping Families Save Their Homes Act, tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease. he protections expire at the end of 2012. It is not limited in its application.

If your landlord short sells the new owner is stuck with you.

Perhaps you could get someone to buy you out.

Good luck