Eviction Process After Foreclosure in California

In California, tenants have more protections after foreclosure than owners do.

Prior to 2008 in California, neither renters nor former owners had many rights regarding evictions after foreclosures. First a state law in 2008 and then a stronger federal law in 2009 imposed restrictions on the eviction of tenants renting homes that had been foreclosed. Owners, however, are not afforded any special protections.

California SB 1137

California Senate Bill 1137, signed into law in mid-2008, required a 60-day notice to residential rental tenants to vacate their homes following a foreclosure. At the time the bill was passed, this was an added protection in some cases because California state law in effect at that time invalidated a lease at foreclosure unless it was signed before the mortgage was issued. This legal premise, known as "first in time, first in right," common in most states, takes away any guaranteed rental duration. In the absence of a lease, California law allowed either a 30-day or a 60-day notice to move out depending on how long they had lived there. SB 1137 required a 60-day notice no matter how long tenants had lived in the unit.

Protecting Tenants at Foreclosure Act of 2009

On May 20, 2009 the Tenants at Foreclosure Act went into effect. This stronger federal law clarified that foreclosures no longer wipe out existing leases and also required a 90-day move out notice to tenants who either had no lease, were on a month-to-month lease or for tenants at the end of their lease term. Because this law was stronger than the 2008 California law, it prevails. Tenants with a lease for a stated duration, then, do not have to move until their lease is up. Others must be given 90-day notices.

Rent Control

Over a dozen cities in California are subject to local rent control ordinances. One of the protections offered by rent control is just cause eviction. This means tenants can only be evicted for good reason, such as non-payment of rent. Foreclosure is not a just cause under most rent control ordinances.

Owner-Occupancy

Owners who were occupying their homes at the time of foreclosure are not considered tenants once a foreclosure takes place. The new owner, whether lender or other party, did not confer upon them any tenancy rights. Therefore, in California, prior owners who remain living in their homes after foreclosure may be given a 3-day notice to move. After three days the new owner can begin a lawful detainer action in court against the former owner.

References

• HERA: California's Foreclosure Process and Timelines -FAQ
• California Governor's Office: Governor Schwarzenegger Signs Legislation to Help Protect Homeowners from Foreclosure
• Comptroller of the Currency: Helping Families Save Their Homes Act of 2009
• State of California Department of Consumer Affairs: California Tenants
• Nolo: Renters in Foreclosure: What Are Their Rights?
• National MultiHousing Council: California Rent Control Laws