10. Post-Foreclosure of Residential Rental Property

Frequently Asked Questions

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Since 2008, there have been a tremendous number of foreclosures and a large percentage of such foreclosures were done upon residential rental properties. A residential rental property is much more valuable to a bank or lender if the property is vacant because a new owner can then charge a high, market rent, therefore lenders will do everything in their power to clear a foreclosed property of the tenants. Many lenders will file meritless eviction actions in court which they dismiss if the tenant files the proper Answer (a tenant admits or denies each part of suit and raises any affirmative defenses) to the Complaint (the lawsuit). It is important for any tenant who fears being evicted or faces eviction to immediately seek legal advice.

Tenants who reside in rent controlled jurisdictions like San Francisco, Oakland and Berkeley, can usually retain their tenancies post-foreclosure because a lender must have a “just cause for eviction” and a foreclosure is not a “just cause”. Also, a new owner post-foreclosure does not have any additional rights to evict than the old owner. Real estate agents, landlord attorneys, new owners and other agents of lenders will often lie to tenants and tell them they have to move out. Sometimes they will offer nominal amounts of money (often it will be $500 to $1000 per unit) to induce tenants to vacate.

Tenants should make sure they know all of their rights before they even consider entering into buy-out negotiations or making a decision to vacate. Most tenants are aware that rents have sky-rocketed throughout the Bay Area in recent years and we recommend that tenants who are living in rent controlled units do everything in their power to hold onto such tenancies.