Evicting Tenants When Landlords Foreclose!
August 20th, 2008 categories: Buyer's Advice, Seller's Advice
Victims in the current wave of foreclosures that I am not hearing much about are tenants. Individuals and Families renting from Landlords that are foreclosing on their properties, caught up in the middle and have their families thrown into a mess.
When a landlord foreclosures on the property he / she must transfer security deposits to the new owner(s) or back to the tenant(s). In truth this will never happen. AB 2586 clearly states that security deposits not returned to the new owner who has purchased the property through a foreclosure is liable for repayment of the security. The successor in interest can not ask the tenant to come up with additional security to replace the amount that was not transferred by the former landlord/owner.
AB 2586 addresses Utility shut offs for homes and condos. Landlords foreclosing on their properties may not afford to pay utility bills so decide to shut them off. The law requires dwellings in multifamily buildings to have notice of a shut off posted. The notice must be posted as well as mailed to
“Any Person Renting Property and allow tenants to begin service in their own names and then deduct payments from the rent and must provide at least 15 days notice. AB 2586 requires utilities to notify tenants of shutoffs by mail and the statement on the envelope must be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean.
The bill is lurking around the California legislature addressing the issues that do arise. Assembly Bill 2586 (Torrico) has passed the Assembly and is now heading for the Senate. The bill materialized due to the fact of tenant harassment pushing tenants out of foreclosed properties sooner than a thirty day eviction notice.
California has tenant-protection laws that govern landlords and tenants. California laws are not that crystal clear when a new owner, a “successor in interest”, takes over a tenant occupied property through foreclosure. 20 – 25% of residential foreclosures in California include rentals. Thats approximately 20,000 renters who were affected in 2007.
Sixty percent of Los Angeles residents are already renters, according to the National Multi Housing Council, an industry group.
