During the California legislative session just concluded, a couple of laws were passed that affect the tenants of residential properties which are in foreclosure. Firstly, Senate Bill 1191 requires that the Landlord must disclose notice of default to prospective tenants. The landlord of any one to four unit residential property must disclose in writing to a prospective tenant if the landlord has received a notice of foreclosure which has not been rescinded. This disclosure must be made before the lease is signed. If the landlord violates this law, the tenant can elect to void the lease and recover one month’s rent or twice the amount of actual damages, whichever is greater, plus all prepaid rent. If the lease is not voided and the foreclosure sale has not occurred, the tenant may deduct one month’s rent from the future amounts owed. Secondly, under Assembly Bill 2610, a tenant is entitled to a 90-day notice to terminate after foreclosure. Effective January1, 2013, month-to-month tenant in possession of a rental housing unit must be given a 90-day written notice to terminate under California law. For a fixed term residential lease, the tenant can generally remain until the end of the lease term, and all the obligations of the lease remain in effect, including the obligation of the tenant to pay rent. Sorry, there are no free passes if the house you are renting is foreclosed, but at least you aren’t uprooted with little or no notice.
There are some exceptions, so you may wish to consult a lawyer if this happens to you.