Legal Question in Real Estate Law in California


The apartment complex I am renting from is going into foreclosure. The complex is up for sale in on June 29th. I am also hearing that the complex is going to be managed by a different management company. What happens to my deposit and is the new company allowed to re-collect a deposit if I don't receive a refund from the old management?

Asked on 6/12/09, 12:20 pm

2 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Deposit

In an ordinary sale of an apartment building, the tenants rights are superior to any rights of the buyer, and the leases remain intact. The law provides two methods for handling tenant deposits: refund and recollection, or pass-along with notice of that fact to the tenants.

A foreclosure sale is entirely different. Tenant leases are wiped out (unless they were senior to the interest of the foreclosing lender, in which case they may survive) and the buyer at foreclosure gets clear title with no obligation to the former tenants. The tenant deposits remain an obligation of the former owner/landlord.

In your case, things may work out better for you, because the new owner and new management company probably are going to want the tenants to stay and probably will be offering new leases. In order to avoid bad relations, you may be offered a better deal. Also, I have to admit the law in this area is under rapid development, with the legislature very concerned about tenants being victims of the landlord's financial woes, and there may be new laws affecting your rights that I don't yet know about.

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Answered on 6/12/09, 1:05 pm
Daniel Bakondi The Law Office of Daniel Bakondi

Re: Deposit

There are rules that address such transfers and assignments. You want to make sure both old and new are on the same page, about retaining your security deposit. You may contact me if you and or the other tenants are interested in having me assist.


Daniel Bakondi, Esq.


No attorney-client nor confidential relationship is created through this communication. You may not rely in any way on this communication, and nothing herein constitutes legal advice nor legal opinion. Your issue may be time sensitive and may result in loss of rights if you do not obtain an attorney immediately.

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Answered on 6/12/09, 1:59 pm

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