Many homeowners are in the process of short selling their property. This is of particular concern for tenants living in a home that is the subject of the short sale. Many landlord/owners will simply give the tenant a 30-day notice to vacate. Usually this 30-day notice is perfectly fine if the landlord has contracted to sell the unit to a purchaser and has established an escrow with a licensed escrow agent or licensed estate broker; the purchaser is a person (not a company); and the purchaser in good faith intends to reside in the property for at least one year after termination of the tenancy. The notice must also be given to the tenant no more than 120 days after the escrow has been established.
However, California law does require that a residential non-fixed term tenant be given at least 60 days’ notice of termination if the tenant has resided in the property for at least one year. If the tenancy is not terminated when the property is sold, the new owner becomes the new landlord. The new landlord retains all of the previous landlord’s rights under the rental agreement. Therefore, new landlord/owners may serve a 30/60 day notice to terminate the tenancies created with the previous landlord. The new landlord/owner can also pursue an eviction action based on 30/60 day notice served by the previous landlord prior to sale.
As for foreclosed upon property, a tenant has the rights under the lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining lease term. However, the successor in interest may terminate the lease effective on the date of the sale to a purchaser who will occupy the unit as a primary residence, subject to a 90-day notice.
Whether the new owner purchased the property through a voluntary sale by the previous owner, or whether the property was foreclosed upon, California law provides tenants with protections.
