2013 California Tenant Law – Landlord Obligations Upon Foreclosure (AB 2610)
Business Litigation
Paul C. Bauducco
818.907.3245
Governor Jerry Brown signed Assembly Bill 2610 in September, a California landlord tenant law which gives current renters more time to stay at a property when a landlord is undergoing foreclosure.
The new law will bring the state more in line with federal law regarding protecting tenants on foreclosed properties. (Senate Bill 1191 is the bill we discussed in my last blog, Responsibilities of Landlord in Default and Foreclosure, which addresses notices to prospective tenants. You may also want to read Seven New Laws in Effect January 1st, for an overview of other legislative changes affecting California property owners and managers.)
AB 2610 amends the Civil Code (section 2924.8) and the Code of Civil Procedure (sections 415.46 and 1161b). When a Notice of Sale is posted on a property, the new owner must post a notice in the same manner which informs tenants of protections available to them.
Landlords must notify tenants that:
1. If they are month to month tenants, the new owner must give them a new lease or rental agreement, or give them 90 days notice before evicting them.
2. If they have a fixed term lease, the new owner must honor the lease, unless:
a. The new owner will occupy the property as his/her primary residence.
b. The tenant is the mortgagor, or the child, spouse or parent of the mortgagor.
c. The lease was not the result of an arms’ length transaction.
d. The rent is well below fair market excluding any federal, state or local rent control laws.
Landlord Responsibilities After a Notice of Default
While SB 1191 pertains to landlords who provide single-family, or four or fewer units in a multi-family dwelling, AB 2610 is broader, having no limitations on residence size.
The law will become operative on March 1, 2013 and will remain in effect until December 31, 2019.
One more thing:
Existing law permits the buyer of the foreclosure property to use a prejudgment claim of right of possession against a holdover former owner.
Assembly Bill 2610 specifically states that this existing law will not limit the rights of the tenant to also file a prejudgment claim of right of possession before judgment. Moreover, the tenant may also object to enforcement of a judgment for possession whether or not the tenant was served with the claim of right to possession.
Paul C. Bauducco is the Chair of the Business Litigation Practice Group at our firm. Contact him via email if you have any questions regarding construction defects, landlord tenant laws or real estate litigation: pbauducco@lewitthackman.com.