California’s Foreclosure Reform Law (SB 1137): 60-Day Notice to Tenants
This article is one of several entries regarding California’s recent enactment of its Foreclosure Reform Law (SB 1137). The general purpose of the new law is to alleviate the negative effects of the rising foreclosure rate in California on lenders, borrowers and renters.
In an effort to protect the interests of innocent tenants, the California Legislature included provisions in SB 1137 that extend protections to renters who find themselves possessing residential property that is foreclosed upon. During this foreclosure crisis, the focus naturally is on the lender and the borrower. Recognizing this oversight, California has established a procedure by which a lender must follow when handling a tenant in possession of residential property at the time of the foreclosure sale.
According to Section 6 of SB 1137, a tenant or subtenant in possession of a rental housing unit at the time the property is sold in foreclosure must be given 60 days written notice to vacate the property before such tenant or subtenant may be removed from the property. This notice must comply with certain applicable notice requirements, similar to the requirements for all legal notices to tenants regarding tenancy. Section 6 is now in effect and will remain in effect until January 1, 2013.
One exception to this provision is that the 60-day notice requirement does not apply if any of the tenants or any other occupants of the housing unit were signers on the loan at issue. Those individuals are not afforded the protections of Section 6.
Of course, if at any time the tenant fails to pay rent within the 60 days, the lender (or new owner) may proceed with a “3-day notice to pay rent or quit”. The formal eviction process would begin at the expiration of those three days, assuming rent was not paid in full.
It is important for lenders to take notice of the above-described provisions of SB 1137. For a free consultation, please contact Griswold Law at (858) 481-1300 or rgriswold@griswoldlawsandiego.com.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment