Is It Illegal To Rent A House That Is In Default in Los Angeles County,los Angeles city?

Asked by Jorge Garces, Los Angeles County, CA Fri Mar 5, 2010

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Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Fri Mar 5, 2010

It says you are a real estate pro, so I recommend that you check with your broker, the CAR Legal Holine or a real estate attorney on this. Only they will be able to give you legal advice.

Beware, however, since most trust deeds have an "assignment of rents" clause in them. If the owner is in default and they rent the property, this would require that they assign the rents to the lender (ie. they don't get the keep the rent money and not make the mortgage payment). Failure to do so would be in violation of their trust deed. Of course, if they are currently in default on their loan, they are already in violation of their agreement with their lender, so it might be that they just don't care. That does not make it legal, moral or ethical, though.

Lastly, in California to the best of my knowledge, a legitimate lease is not negated by a foreclosure. However, this could be viewed as a fraudulent lease, as the lease was signed AFTER the landlord knew the home was in default.

I caution you, as a real estate professional, do not get involved in this without getting legal advise. Good luck.
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Fred Glick, Agent, Mountain View, CA
Fri Mar 5, 2010
No, it's not illegal but after the property gets foreclosed, the lease is null and void.
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