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CA landlord tenant laws, CA foreclosure laws, paying rent during foreclosure

Asked over 3 years ago - Anaheim, CA

I currently am renting a home that is in "short sale". Our lease is up in two months and we are currently in Escrow on a home we plan to move into in a month. I know that the landlord has lost one home to foreclosure, has this one in short sale, and possibly had a car repossessed as well (we see repo letters come to through the mail). We've paid $2000 in deposits for the rental. I'm guessing she is taking our current rent we pay and using it as income rather than paying the mortgages she owes. I'm very concerned that she will not be able to return our deposit when we leave. I was considering not paying the last month's rent and having her deduct it from our deposit. Is this the right thing to do to protect myself on getting our deposit back? Should I even pay this month (due in 7 days) if my new home purchase will be closing in about 30 days? I want to protect myself from any illegal actions while not being foolish and enabling my current landlord to walk with my upcoming rent and initial deposit.

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Attorney answers (2)

Linnea Long

Answered over 3 years ago. General Practice Lawyer in Seattle, WA.

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While I do not practice law in CA, I was able to find this government consumer affairs resource. It offers practical advice and hopefully will give you some guidance.

The second link was posted in Yahoo answers and has a good discussion of the issues facing Tenants/Lessees when the property goes into foreclosure.

California Department of Consumer Affairs, CA Tenants-Refunds of Security Deposits

Patrick.net housing crash news | bubble blog

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Stanley Duane Lockhart

Reputation Level 14

Answered about 3 years ago. Bankruptcy Attorney in Alameda, CA.

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Should you pay this months rent? This is a legal obligation and enforceable by court action. All rent is payable to landlord or owner of the property as due. You will owe either the current owner or new owner on a pro rata or daily rate that is calculated in escrow. If you give notice and move out prior to the close of the short sale, the current owner of the short sale is entitled to the rental income and obligated to you for the security deposit.

Short sales can take 2-5 months to close depending on the parties, lenders, agents and what stage of foreclosure or default has occurred.

If the short sale closes before you move, then the new owner acquires the deposit and the pro rata rents. The new owner becomes obligated on the terms of the rental agreement. The rental agreement is part of the rights and obligation that the new buyer is acquiring in the sale. You should be required to provide a 'tenant estoppel' that restates and confirms the terms of your rental agreement whether in writing or oral month to month as part of the new owner's purchase agreement and mandatory disclosures.

If the current owner is judgment proof and you have no hope of collecting the deposit after you move out...?

If you withhold rents, she can serve a three day pay or quit and start eviction (unlawful detainer) and a judgment/lien obtained if you don't move out prior to court decision. You are still subject to suit for breach of contract in small claims or civil action.

Two months left; $2000 deposit, can't you come to a separate agreement with the current owner. Talk to her, make her an offer, offset the rent and deposit and a little extra for the convenience of not getting lawyer or court action involved.

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