California Landlord Tenant Law – Responsibilities of Landlord in Default and Foreclosure (SB 1191)
Business Litigation
New California landlord tenant laws go into effect in 2013 for rental property owners facing foreclosure.
Senate Bill 1191 was signed into law by Governor Jerry Brown in September, adding Section 2924.85 to the Civil Code. (Read about other new laws for landlords, housing associations, and property managers in last week’s blog, Seven New Laws in Effect January 1st.)
Notice of Default – California Civil Code Section 2924.85
(Effective January 1, 2013)
If you provide single-family homes or multi-family dwellings of four or fewer units for rent and have received a notice of default for a mortgage or deed of trust for the property, you are required to provide written notice – in English and other languages per California Civil Code Section 1632 – of that default to any prospective tenants.
In your notice to a prospective tenant, you must disclose that the property may be sold in foreclosure and that the tenant may, or may not be forced to move in the future.
You should also state that a new landlord or property owner must honor the lease unless the new owner chooses to occupy the property as a primary residence or if there is a “Just Cause for Eviction Law” applicable in your city.
If you are buying a rental property in a foreclosure sale, you’ll need to provide the tenants with a 90 day notice of eviction if you plan to evict.
Penalties for Violating Section 2924.85
Section 2924.85 provides for certain tenant rights in the event a landlord fails to give the required notice, including:
- Allowing the tenant to void the lease and recover the greater of one month’s rent or twice the actual damages suffered; or
- If a foreclosure has not occurred, allowing the tenant to elect not to terminate the lease, but to deduct an amount due to the landlord equal to one month’s rent.
Foreclosure Notice – California Civil Code Section 2924.8
(Effective March 1, 2013)
As a property owner, you should direct your managers to deliver written notices of foreclosure to existing tenants in writing. The exact language for the Notice is set forth in Section 2924.8, including notice that:
- Foreclosure has begun which may affect the tenant’s right to continue to live in the property.
- The property may be sold 20 days or more after the date of the notice.
- The new property owner may give the tenant a new lease or provide the tenant with a 90 day eviction notice.
- The tenant may have the right to stay in the property longer than 90 days if he/she has a fixed term lease, which the new owner must honor, unless the new owner will occupy the property as a primary residence.
- In some cases and in some cities, where there is a “just cause for eviction law”, the tenant may not have to move out.
- The tenant may wish to contact a lawyer or legal aid office to discuss his/her rights.
Paul C. Bauducco is a Construction Defect and Real Estate Litigation Attorney at our Firm. He is also the Chair of the Business Litigation Practice Group. Contact him via email: pbauducco@lewitthackman.com.