Tenant’s rights in evictions after foreclosure in California are the topic of this blog post. This post will specifically discuss the provisions of Code of Civil Procedure section 1161b
When the housing bubble burst it caused many properties to go into foreclosure all over the United States. Tenants that were renting properties that had been foreclosed on were discovering that the property they had been renting and living in had been foreclosed on and they were expected to move out very quickly.
The general rule in California as well as many other states at that time was that after the foreclosure sale any lease entered into between the previous owner and another person was extinguished. Eviction proceedings could be commenced very soon after the foreclosure sale.
However the California Legislature amended the provisions of Code of Civil Procedure section 1161b that became effective on January 1, 2013. This was done to ensure that California law was comparable to Federal law, namely the Protecting Tenants at Foreclosure Act which expired on December 31, 2014.
Tenants in California who signed a lease with the previous owner of a property that has been foreclosed on now have the right under this new law in most cases to remain in the property until the remaining term of their lease as long as they comply with the terms of the lease. And even tenants who do not have a lease with the previous owner are still entitled to a 90 day notice to vacate if they are considered a bona-fide tenant under the law.
Code of Civil Procedure § 1161b states that,
“(a) Notwithstanding Section 1161a, a tenant or subtenant in possession of a rental housing unit under a month-to-month lease or periodic tenancy at the time the property is sold in foreclosure shall be given 90 days’ written notice to quit pursuant to Section 1162 before the tenant or subtenant may be removed from the property as prescribed in this chapter.
(b) In addition to the rights set forth in subdivision (a), tenants or subtenants holding possession of a rental housing unit under a fixed-term residential lease entered into before transfer of title at the foreclosure sale shall have the right to possession until the end of the lease term, and all rights and obligations under the lease shall survive foreclosure, except that the tenancy may be terminated upon 90 days’ written notice to quit pursuant to subdivision (a) if any of the following conditions apply:
(1) The purchaser or successor in interest will occupy the housing unit as a primary residence.
(2) The lessee is the mortgagor or the child, spouse, or parent of the mortgagor.
(3) The lease was not the result of an arms’ length transaction.
(4) The lease requires the receipt of rent that is substantially less than fair market rent for the property, except when rent is reduced or subsidized due to a federal, state, or local subsidy or law.
(c) The purchaser or successor in interest shall bear the burden of proof in establishing that a fixed-term residential lease is not entitled to protection under subdivision (b).
(d) This section shall not apply if any party to the note remains in the property as a tenant, subtenant, or occupant.
(e) Nothing in this section is intended to affect any local just cause eviction ordinance. This section does not, and shall not be construed to, affect the authority of a public entity that otherwise exists to regulate or monitor the basis for eviction.
(f) This section shall remain in effect only until December 31, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before December 31, 2019, deletes or extends that date.”
Tenants who have entered into a lease with the previous owner before the notice of foreclosure have the right to remain until the end of their lease. The only exception is if the purchaser at the foreclosure sale intends to occupy the property as a primary residence, and even then a 90-day notice must be given.
However, the law provides a tenant must meet certain conditions to be considered a bona-fide tenant. For instance, neither the previous owner or his spouse or child are bona-fide tenants, the lease must be the result of an arms-length transaction, and the rental amount must not be substantially less than fair market rent for the property, unless the rent is reduced or subsidized due to a Federal, State or local subsidy.
Attorneys or parties in California who would like to view a portion of a sample answer to an unlawful detainer complaint that contains 15 affirmative defenses, including the affirmative defense that the tenant is entitled to possession of the premises under the provisions of Code of Civil Procedure section 1161b sold by the author can see below.
Attorneys or parties in California that would like more information on a California unlawful detainer (eviction) document package containing over 25 sample documents including a sample answer to an eviction complaint sold by the author can use the link shown below.
The author of this article, Stan Burman, is a freelance paralegal who has worked in California and Federal litigation since 1995.
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Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.
The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.
Filed under: California civil litigation, California foreclosure, California freelance paralegal, California unlawful detainer, Foreclosure | Tagged: California law, Code of Civil Procedure section 1161b, eviction, eviction after foreclosure in California, foreclosure, Law | Leave a comment »