What are our rights as tenants, should the house we live in be under foreclosure?

Asked by Drdimitri1, San Bruno, CA Tue Nov 13, 2012

We received a Notice of Trustee's Sale on the door of the house we are renting. The landlord isn't telling us a thing. We are seeking advice or where to go to get answers on what we could and should do as tenants. (Is it even legal to rent a place out after you know it is being foreclosed upon?)

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Simon Campbell’s answer
Simon Campbe…, Agent, Miami Beach, FL
Tue Nov 20, 2012
Your tenant rights exist for the term of your contract regardless of who owns the property. That is unless you default on the lease agreement which gives the owner the right to evict you.

If you really like the place you rent and are in a position to buy, you could consider contacting th the lender that sent the Notice of Trustee's Sale and discuss purchasing the property. Usually they want to sell the property for the loan balance plus any fees such as loan late fees, legal costs etc.

If you do not get anywhere with the Lender, contact the property owner (your landlord) and ask if they would be willing to sell the property to you. You would have one of two options:

Option #1: Prepare a purchase agreement and have the owner submit it to the lender for a short sale.

Option #2: If you cannot get a bank loan (poor credit, do not have 20% downpayment), you could purchase the property on a land contract. Your downpayment would be the amount owed to the lender to stop the foreclosure process. Then you use the LC payment to pay on the mortgage. After 3 - 5 years you should have enough equity and a stronger credit rating to apply for a loan.

Simon Campbell - http://www.bankforeclosuressale.com
0 votes
Ann Ryan, Agent, Doral, FL
Tue Nov 13, 2012
Wow. Dr. Dimitri, please check out page 48 of this lovely document written by the State of California.

When property is sold in foreclosure state law provides that a tenant in possession
of a rental housing unit at the time a property is sold in foreclosure shall be given 60 days’ written
notice to quit before the tenant may be removed from the property. however, if your lease was
signed before the deed of trust or mortgage was recorded, your lease will not be set aside by the
foreclosure. Federal law now requires that you be given 90 days’ written notice to quit (leave the
property). under the 2009 “protecting tenants at Foreclosure Act,” a buyer of foreclosed property
must honor your lease until the end of the lease term, unless the buyer will be moving in and
using the property as the buyer’s home. in that case, you are entitled to 90 days’ notice to
quit. this is also true if you are a month-to month tenant. the Act creates similar protections
for tenants with section 8 vouchers. this rule does not apply to rental agreements that were
not the result of arm’s length transactions or where the rent is much less than fair market rent
for that property. California recognizes that tenants of units sold in foreclosure now have a right to this 90-day notice under federal law. specifically, any notice to quit served within one year after a foreclosure sale must also inform renters that they may stay in the unit for at least 90-days.
0 votes
Cindy Davis, Agent, San Diego, CA
Tue Nov 13, 2012
As long as the owner owns the property it is perfectly legal to rent it out. You can certainly explore your rights with tenant rights groups but the bottom line is you need to move.

For your sake, start working on a replacement now so you don't get stuck when the home forecloses.

Take care.
0 votes
Vicki Moore, Agent, San Carlos, CA
Tue Nov 13, 2012
Here's some info that might be helpful

California tenants can reach the Tenant Foreclosure Hotline toll free at 1-888-495-8020 or submit an online intake form at http://www.tenantstogether.org/hotlineintake to get a call back from a counselor.

Best wishes to you - it's an awful situation.

Vicki
0 votes
Thank you ever so much. This is exactly what I was seeking.
Flag Tue Nov 13, 2012
Karin Cunnin…, Agent, San Bruno, CA
Tue Nov 13, 2012
This is always an unfortunate situation for everyone. You have a contract with the owners because they are still owners. Looks like the house will be sold in the months to come so I would look for a new place. The bank or whoever takes over will no doubt be giving you a notice to vacate. Bornstein and Bornstein Law Offices are specialists in landlord and tenant rights in the Bay Area 415-409-7611
0 votes
Thank you for the legal connection.
Flag Tue Nov 13, 2012
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