New law about evicting tenant (SB 896)

Foreclosure Investing
1

If I just purchased a property at a Trustee Sale and there is a tenant with a lease of 1 year, what is the process of eviction? I just heard that there is a new law that we have to honor the entire lease before we can evict them. Is this true?

2

You are likely referring to SB 896 that took affect last year. Sean O’Toole the founder of ForeclosureRadar blogged about this May 25, 2009. To read that blog post go to www.foreclosuretruth.com or http://www.foreclosureradar.com/forum/buyers-and-investors/buying-auction/new-law-about-evicting-tenant.

3

Hi,
Could you please post the link concerning SB 896.
Thank you

4

Here is the direct link to that blog post…
http://www.foreclosuretruth.com/blog/sean/auction-investors-reo-brokers-and-renters-take-note-significant-change-eviction-notice-req/

5

OK, but what about the practical reality? In most cases will tenants prefer to move on their own when you firmly yet legally advise them of new ownership, give a 3 day notice to provide the copy of the lease or quit, or offer Cash for Keys?

In other words, should an investor AVOID buying homes at Trustee Sales when occupied by a tenant?

6

I mean, especially if the intent is to rehab and flip instead of buy and hold?

7

The current occupancy should definitely be considered when analyzing a property as a good rehab opportunity. I don’t think that you want to categorically “avoid” any property. I have certainly seen many investors do their due diligence to try to talk to the occupants before the sale. This is all part of the research on determining your level of interest and maximum bid. I recently talked to an investor that paid a huge sum (5 figures) for cash for keys just to keep the occupant from trashing the property and to get them out fast.

8

I just purchased a home occupied by a tenant at the trustee sale in San Diego.The NOD was filed on 12/15/2008. The NTS was filed on 3/18/2009, and then again on 6/28/2010. On 7/26/2010 I purchased the property at the Trustee auction. The tenant signed a 1 year lease in March 2010. Can I legally evict the tenant, or do I have to honor the lease?

9

I just confirmed that the lease must pre-date the Notice of Default. You would still be required to give a 90 day notice but you would not have to honor the lease.

10

Sean, what about the rights of the new owner? I purchased a property which is (apparently, I have requested but not seen) subject to a month to month lease after expiration of the lease term. The foreclosure service is saying that unless the tenant signs a new lease they do not have to pay rent during the 90 day notice period. Does that sound right?

11

Although the statute is silent on this issue we have heard from auction investors that judges have awarded reasonable rental value for the time of possession. I would take this to mean that the occupant would need to pay the monthly rent since they have possession of the property during the time that they occupy the property after the 90 day notice to vacate is issued.