Tenant Occupied Foreclosure

Asked by Confusedbuyer, Los Angeles, CA Tue Apr 6, 2010

I'm bidding on a foreclosed single family residence that is curently tenant-occupied and the bank is NOT going to deliver the property vacant upon the closing of escrow. Thus, we must deal with the tenants ourselves. The tenants have been living there for two years and have two young children. They are currently living rent-free, although I'm not certain for how long. I plan to live in this house. My questions are:

1. When do I give them notice that they have to vacate and how long are the notices?
2. Would the 3 days notice apply to them since they haven't been paying rent?
3. Do I have to provide them with relocaton assistance even though they have been living rent-free and it's a single family home? Would that law apply to them?
4. Can I demand that they start paying rent upon the close of escrow?

Unfortunately, my agent has not been helpful with any of the above questions. Anything you can provide is greatly appreciated.

Help the community by answering this question:

+ web reference
Web reference:


David Cooper’s answer
David Cooper, Agent, Los Angeles, CA
Wed May 18, 2011
If you want the house to be in habitable condition, I would suggest offering them money to leave, and only pay them after you inspect the property. I wouldn't go "legal" on them until you get a conversation going with them, prove to them that you are the new owner, and hope they don't destroy the place.
I never, ever

David Cooper..Las Vegas Investor and Buyer's Agent for Bank Owned REO with Hugh Cash Flow
0 votes
Jane Grant, Agent, Aguanga, CA
Wed May 18, 2011
Only an attorney can assist you with this. Realtros are not attorneys! This type of purchase is not for everyone and you could end up waiting longer then you think to attain access to the home. Also, read every disclosure that they give you and take these documents to an attorney. This is not a typical real estate transaction and this is one reason that your agent is not helping you. Agents cannot give legal advice.
0 votes
Heather Paul, Agent, Santa Monica, CA
Fri Apr 22, 2011
Hello Confusedbuyer, I would highly recommend hiring an eviction service, they will know all the steps you will need to take and the time frames, Your agent could also demand that the bank do the eviction process as you will be occupying the property yourself, it sound as if your Realtor is not used to the process of bidding on foreclosures "Reos" I would not recommend closing until your property is delivered vacant!!

Best of luck,
Heather Paul, Realtor
Coldwell Banker
0 votes
T, Home Buyer, 75237
Mon Apr 11, 2011
Neded to also study the new Rent Skimming laws ( CCA #890, etc) in CA since under certain circumstances if the owner is in default hte tenat does not have to pay rent during the default.
0 votes
T, Home Buyer, 75237
Thu Mar 17, 2011
This question applies only to CA laws: So what happened eventually? Has anyone completed at foreclosure auction purchase and then tried to move tenant out?
0 votes
Gerard Carney, Agent, Spring Hill, FL
Fri Feb 18, 2011
Demand te bank to evict as condition for the sale! You need not take any foreclosedd home that is still occupied, eviction of the home should have been part of the foreclosure process. Tell you agent to demand that the bank does the eviction.
0 votes
Sara Mehrpou…, Agent, Los Angeles, CA
Fri Feb 18, 2011
Do not try to handle the relocation of tenants by yourself because it could be risky on your part. You should consult with an attorney. But, try to speak to the tenants yourself and see how that goes. You are allowed to have them leave if you will be occupying the property yourself.

0 votes
Sam Goldberg, , Everett, WA
Thu Jan 27, 2011
If you purchased the property at foreclosure, under Sections 702-704 of PTFA, you would be the “immediate successor in interest” to a foreclosed property and must give “bona fide” tenants at least 90 days’ notice to vacate.

If you intend to reside in home as your primary residence, you are still required to give a 90 day notice. In my state which ever laws (Federal /State/ Local) that offer the greatest protection to tenant prevail.

There have been several revisions including a two-year extension of the PTFA sunset date, now till 2014.
Federal case law now exists, unfortunately there are many involved in these foreclosure transactions that think the law does not apply to them and are learning the hard way. Tenants have resources and in our area some attorneys are now taking cases representing tenants on a contengiency basis.

Read the law and make sure you get your legal advice from lawyers who actually know the law.

When you purchase a property at foreclosure, there are many unknowns when there are tenants. This lack of information could land you smack dab in the middle of an Americans with Disabilities Act or Fair Housing issue.

Suggestions to turn off utilities or involve law enforcement targeting the tenant as trespassers can be counterproductive and very costly litigation and judgments against the landlord.

At the end of the day in these situations, I have learned that I get positive results by keeping the interactions with tenants as non-adversarial as possible. Speak to tenants with respect and understanding of the unfortunate position their previous landlord put everybody in. This may sound a bit silly, but ask the tenants how they are doing. I had a property where the renter was a tradesman and confided his family would have a financial hardship moving. Remember the original landlord is responsible for returning their deposit. We all know that security deposit is in the wind, and you don't want the tenant to lash out at your newly acquired property.

I have had deals where it actually made sense to keep the tenant, especially when comps in the area are still in rebounding and the rent produces a positive cash flow.

Tenants who have a portion of their rent subsidized by the HUD Section 8 program have saved my bacon during the slow economy. Many of those contracts were locked into higher pre-recession rental rates
0 votes
Suzanne MacD…, Agent, Morristown, NJ
Thu Dec 9, 2010
Definitely consult an attorney. If you are using one for the closing, ask them. Try also your state government, in New Jersey there is free advice through our Department of Community Affairs. I doubt you can go after them for not paying rent to the bank, that would be the bank's choice, to enforce collection or not. I also feel fairly certain you can demand they start paying rent as soon as you are the official 'owner' of the property. However, all of this hinges on California law, you need an attorney, plain and simple.
0 votes
David Akram , Agent, Granada Hills, CA
Thu Dec 9, 2010
You should consult a Real Estate attorney to get the actual legalities involved with tenants living in foreclosed property. There is a reason why your agent has not been helpful because it is outside the scope of his or her expertise as a realtor.

Hope this helps.
Web Reference:  http://www.DavidNewHome.com
0 votes
Derek W, Agent, Mount Vernon, NY
Thu Dec 9, 2010
The law passed in may 2009 to protect tenants living in foreclosed homes, http://www2.state.id.us/ag/consumer/foreclosure/ProtectingTe… applies specifically to tenants who are paying rent and in good standing.

You should ask the bank to provide you with any information they have on the tenant, including names of occupants and a certified letter stating the tenants have not paid rent to date. Once you have closed and are certified as the new owner you should now move to have an attorney process the necessary eviction documents.

This will not be complicated because they are in arrears. Additionally, the judge will move to evict them immediately because they have not paid any rent in such a long time.
0 votes
Van Agakanian, Agent, Tarzana, CA
Wed Apr 7, 2010
You are asking for legal advice and you must seek legal advice only from an attorney! It would be in your advantage before bidding on tenant occupied residenses.
0 votes
Monique & Joe…, Agent, Beverly Hills, CA
Wed Apr 7, 2010
Hello Confused Buyer,

If you are bidding on a property do you mean at a forclosure sale at the auction? There is no escrow with that kind type of deal. If it is a property that you are writing an offer on (as opposed to bidding) you should request that the property be delivered vacant at the close of escrow. If the bank is saying know then you will want your agent (if you have one) to negotiate cash for keys. This is a contract most realtors have access too. This basically gives them an incentive to move by a specified date (the amounts are usually 3k-5k). If they don't agree to it you will have to post notices and go through the process of evicition. If they don't move out and fight it you could be looking at as much as 6 months to get them out plus legal fees. It's tough but can be done. Since these are tenant's you will want to get an attorney involved documenting there lack of payment and leases if any. It's sticky but if they aren't going to pay rent you will need to evict them.

I am sorry your agent isn't being of much assistance. If they don't know the answer to your questions it's their job to seek out answers and guide you. Good luck.


Monique Carrabba
The Carrabba Group
Keller WIlliams Hollywood Hills
(323) 899-2900
0 votes
Jeffrey White, Agent, Beverly HIlls, CA
Wed Apr 7, 2010
You need to consult a real estate attourney. This situation consists of needing specific legal advice and your agent should refer you to a legal expert.

One very helpful document to give you the basic laws regarding relocation and eviction is the Landlord Tenant Handbook which can be downloaded from the LA HUD website.
0 votes
Laurie Manny, , Long Beach, CA
Wed Apr 7, 2010
We were just in a similar situation. The bank/listing agent didn't handle the eviction properly and were going to have to start from scratch which meant a new 90 day notice to the tenant. The bank demanded that the property close regardless on 5/5. Once the property transfers to the buyer the tenant issues do as well becoming the problem of the new owner. You cannot just throw them out, you cannot turn off the utilities either. You do have to follow the law which is why you should speak with an attorney.

Our client decided to pull out of the escrow, we agreed with their decision because there are just too many things that can go wrong and could cause the buyer financial distress as the new owner. In our case the tenants were hostile which indicated a potential for a battle our buyer wasn't interested in participating in, they just wanted to buy the home.

Here are some resources from the web that you might find helpful:



Title VII, Protecting Tenants at Foreclosure Act of 2009
(The Helping Families Save Their Homes Act of 2009 signed into law on Wednesday, May 20th, 2009 (Pub. L. 111–22) provides a 90-day notice requirement and additional requirements for tenants in foreclosed properties)

Click here to read the full Public Law 111-22-May 20, 2009


Best of luck to you,
Laurie Manny
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Apr 6, 2010
Confer with an attorney this is a legal matter.

However once the property closes they could be consider trespassing you IN MOST instances whatever is left on property day of closing then it is buyers personal belongings.

You could have utilities turned off , you own the property notify utility company than no one turn on utilities unless you provide a code for access.

You don't own the property therefore have no rights till moment title company notifies you own it.

Direct Link : http://www.enotes.com/everyday-law-encyclopedia/trespassing

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Web Reference:  http://www.lynn911.com
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more