Im an existing tenant and home was bought at auction

[Michael Wood]

Hi my name is Michael Wood from Castro Valley California  I have a 5 year lease,  and the house went into foreclosure and sold at auction .  New owners plan  on  renovating a home and selling it back on the market .  I still have two years left of my five year lease .  Do the new owners  have to buy out the rest of my lease .  Or do they have to pay for my relocation to another place as far as first last and deposit .  Please forgive me if I am asking the wrong type of questions I'm kind of new to this .  Thanks in advance for any help it is much appreciated

[Gary Saunders]

Michael; 

I sympathize with your situation.  Many of our clients at Saunders Law Group have faced similar circumstance.  

The new owner of the property must uphold the lease or issue Notice of Termination of Tenancy depending on several factors.

CCP 1161b defines the parameters that must be met in order to assert your right to continued tenancy through the duration of the fixed term lease.  This Code Section essentially provides that the winning bidder of the foreclosure sale must uphold the terms of the Lease, or issue Ninety (90) Day Notice of Termination of Tenancy depending on whether your lease agreement is considered bona fide.  

A bona fide lease will feature fair market value rate of rent, and usually a record of a security deposit payment.  In order to be determined bona fide the Lease must be created under an arms length transaction, and cannot not be entered between the foreclosed borrower and his or her child, spouse, or parent.  It is important to note that the new owner of the property may issue Ninety (90) Day Notice of Tenancy despite the existence a bona fide lease if they intend to occupy the property as their primary residence.

If a bona fide lease does not exist the new owner of the property may issue Ninety (90) Day Notice of Termination of Tenancy.

If a bona fide lease exists the new owner of the property must uphold the terms of the lease and assume the rights and liabilities held by your landlord with respect to accepting payment of rent, making repairs, and issuing disposition of the Security Deposit following Termination of Tenancy.  

By proving bona fide tenancy via your Lease Agreement or receipts for previous payment of rent you may assert your right to continuing the tenancy through the remaining period stated by the Lease Agreement.  

You can not compel the new owner of the property to pay you to relocate.  However, you may negotiate a "Cash-for-Keys" Settlement Agreement whereby the new owner of the property provides an amount as payment in consideration for your vacating the property and removing all belongings by a mutually agreed upon date.  In most cases the sooner you are willing to vacate the more you are able to negotiate as a settlement amount.

Properties purchased at foreclosure sale are often bought by property investors.  These investors are often incentivized to sell property purchased at foreclosure sale due to: 1. the cost of their hard money loan, 2. an objective to "flip" the property, or 3. other factors.  Some investors who purchase property at foreclosure sale are not interested in becoming a landlord and managing property.  For these reasons you may have some leverage in negotiating settlement if you would like to relocate.

We have represented hundreds of tenants in California towards negotiating "Cash-for-Keys" Settlement Agreements.  Because of the resources available to our office we are usually able to secure more favorable terms in comparison to terms that a property owner may otherwise be willing to agree to should you negotiate without attorney representation.  Please seek legal advise from a California Attorney knowledgeable in landlord/tenant law to best determine how you should proceed.