Legal Question in Real Estate Law in California

Landlord Foreclosure

Through a friend of mine who is a realtor I found out my landlord of 2 months is in foreclosure. Do I pay rent to the lender, approach my landlord, deposit rent in an escrow account for later? What do I do? I signed a 1 year lease. According to my sources my landlord is behind over $14,000.00 on his first loan of $218,372 and has a second loan. Thanks for helping,

Baron


Asked on 3/27/08, 12:16 am

2 Answers from Attorneys

Mitchell Roth MW Roth, Professional Law Corporation

Re: Landlord Foreclosure

I looked at Mr. Whipple's answer and it is very smart. That being said, if the landlord has not only recently acquired the property, the rent skimming statutes are of no assistance. If the foreclosure happens you may have to leave in spite of your lease, but maybe not. It will depend upon the buyer and what the buyer wants. The one year lease will no longer protect you, but unless and until you are given a 30 day eviction notice, you may remain but must then pay your rent to the new owner.

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Answered on 3/29/08, 9:23 am
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Landlord Foreclosure

There are both purely "legal" advice and tactics you could employ here, and also "practical" tactics. I can't go over the whole range of possibilities, but let me give you a few thoughts and maybe some other LawGuru lawyers can supplement:

(1) First, perhaps with the help of the realtor friend, but you can do it yourself, go to the County Recorder's office and get all the recent documents on file for that parcel number, concentrating on the Notice(s) of Default, but also everything else for the prior three years or so, and have copies made for you.

(2) While at the Recorder's, look up your landlord by name in the grantor and grantee indexes to see what other real estate he's involved with.

(3) Check with the tax collector to see if the taxes are delinquent.

(4) Read your lease for clauses mentioning what you're assured in the way of "quiet enjoyment." This has little or nothing to do with noise levels, by the way. Quiet enjoyment is a tenant's legal right to have his or her tenancy undisturbed by adverse claims to the right of occupancy and possession under the lease.

(5) Obtain and study the Civil Code sections 890 to 893 law against rent skimming to see if this might be a case of that.

(6) After studying all this, approach the landlord and express some concern without letting on everything you know. See if you get an honest explanation.

Whether to stop paying rent is a tough decision, but if you have enough facts to show that there will almost inevitably be a breach of lease when a foreclosure occurs, you can probably shift the blame, legally and credit-agency-wise, to the landlord.

Basically, someone whose ownership position in property is that precarious has a duty to inform all prospective long-term tenants of that element of risk before entering into the lease, and failure to do so probably shifts the blame and the burden to the landlord, but, hey, you can't get blood out of a turnip.

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Answered on 3/27/08, 2:28 am


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