Recent Developments Pertaining to Tenants of Foreclosed Residential Property

California Code of Civil Procedure §415.46 provides that when the owner of real property brings a summons and complaint for unlawful detainer (eviction) against a tenant or subtenant, the landlord may also serve a Prejudgment Claim of Right to Possession upon any person who appears to be an occupant of the property at the time the eviction action was filed.  It is important that the landlord comply with the statute, because if the landlord has failed to properly serve the Prejudgment Claim of Right to Possession in accordance with the statute, then a person claiming to be an occupant, but not named in the summons, may object to the enforcement of the judgment when the sheriff attempts to enforce the writ of possession.  The statute was amended January 1, 2013 to provide that after a foreclosure sale of rental housing, the statute shall not limit the right of any tenant or subtenant of the property to file a Prejudgment Claim of Right to Possession at any time before judgment or to object to the enforcement of a judgment for possession of the property, whether or not the tenant or subtenant was served with a Prejudgment Claim of Right to Possession.  The amendment expands the rights of persons who occupy foreclosed residential property.

Additionally, California Code of Civil Procedure §1161(b) provides that a tenant or subtenant in possession of rental housing under a month-to-month lease or a periodic tenancy at the time the property is sold in foreclosure shall be given 90 days written notice to quit (move out) before the tenant or subtenant may be removed from the property.  This statute provides special protection for tenants of residential property in foreclosure.  Tenants or subtenants in possession of rental housing under fixed-term residential leases entered into before transfer of the title at the foreclosure sale shall have the right to possession until the end of the lease term, and the rights and obligations under the lease survive the foreclosure sale except in certain circumstances: (1) where the purchaser of the foreclose property intends to occupy the unit as his primary residence, (2) where the lessee is a child, spouse, or parent of the mortgagor, (3) where the lease was not the result of arm’s length transaction, or (4) where the rent required by the lease is substantially less than the fair market rental value of the property.  The statute also does not apply if any party to the foreclosed upon promissory note remains in the property as a tenant, subtenant, or occupant.

Contact Us Today!

Contact us by calling (831) 757-5246 or by filling out the form below. We look forward to hearing from you.

* Indicates a required field.

  • By submitting this inquiry, you attest that you have read and understood the Disclaimer.