Tenants Rights In Foreclosures

 

San Francisco is not seeing a lot of foreclosures relative to interior California but there are foreclosures have soared here too, with 50-100 properties being foreclosed on each month (not counting the recent CitiApartment foreclosures). At least half of these foreclosed properties have tenants--not the property owner--living in the building. Most have been in rented out single family homes or condominiums which real estate speculators bought and then rented out. Recently, foreclosures in multi-unit properties (not just CitiAPartments) have increased as the mortgage meltdown is now spreading into commercial mortgages (which are what mortgages for multi-unit buildings are).

San Francisco City Attorney Memo on Tenants Rights In Foreclosure

If You Have Rent Control You Are Fully Protected From Evictions, Rent Increases or Other Changes in the Tenancy

If your building is two or more units, or a condominium or single family home moved into before 1/1/96, and it was built before 1979, you have full rent control protections. A foreclosure is not a just cause for eviction and tenants can not be evicted, have their rent increased or have services taken away or have the terms of their tenancy changed in a material way because it's a foreclosure. The Court of Appeal held in Gross v. Superior Court (1985) 171 Cal.App. 3d 265 that foreclosure, like any other sale, is not a just cause for eviction under the Rent Ordinance and provides no basis to force the tenant to leave. The bank is simply the new landlord. The main issue rent controlled tenants have is that the bank is often out of town and ignorant of San Francisco laws. Tenants who get an eviction notice from the bank should write the bank informing them of San Francisco rent control protections prohibiting evictions and should file a wrongful eviction petition at the San Francisco Rent Board (25 Van Ness or petitions can be downloaded from the Rent Board web site.

If You Have Eviction Controls (But Not Rent Control) You Are Protected From Evictions Following A Foreclosure

Tenants living in single family homes or condominiums which were built before 1979 and were moved into on or after 1/1/96 do not have full rent control but do have just cause eviction protections. Again, foreclosure is not a just cause for eviction so tenant can not be evicted for a foreclosure. Tenants could have their rent increased, however, our experience has been that the foreclosing banks.have not been willing or savvy enough to try to use rent increases as a way to get tenants out. Thus usually the main issue remains that the bank is often out of town and ignorant of San Francisco laws. Tenants who get an eviction notice from the bank should write the bank informing them of San Francisco rent control protections prohibiting evictions and should file a wrongful eviction petition at the San Francisco Rent Board (25 Van Ness or petitions can be downloaded from the Rent Board web site.

If You Have Neither Rent or Eviction Controls You May Be At Risk of Eviction (or Rent Increase) Following A Foreclosure

San Francisco tenants in single family homes or condominiums which were built after 1979 have neither rent or eviction controls and thus have few protections from a foreclosure. The bank, of course, can not simply lock you out or take any such action but must issue a 90 day eviction notice and sue for eviction if tenants do not move. Increasingly, banks are not trying to evict tenants and federal mortgage holders Fannie Mae and Freddie Mac have now made it their policy not to evict renter occupants of foreclosed properties.

Protections Against Utility Turnoffs Following Foreclosures

One potential issue tenants face after a foreclosure is termination of the utilities, as the defaulting landlord has likely fallen behind in their PG & E payments and the foreclosing bank is unlikely to pay those back bills. If that happens, tenants have a couple of options: First, the state Public Utilities Commission requires utility companies to give tenants the right to assume the utilities in their own name, without having to pay any of the back bills owned by the landlord. rent controlled tenants would then be able to get a decrease in rent from the Rent Board to compensate for now having to pay the utilities themselves. Tenants may find, though, that PG & E is not always easy to work with and tenants trying to get the utilities back on will have to work their way up from desk staff to Supervisory staff. Ultimately, if problems persist, tenants should contact the PG & E Legal Department. In addition, the San Francisco Department of Building Inspection can issue orders to a landlord (i.e. the Bank) to restore or continue utility services, so tenants can also file a complaint with the Department of Building Inspection. While some Bay Area communities have seen issues with water turnoffs in foreclosed properties, the San Francisco PUC will not turn off the water but instead issues liens against the property owner when back bills are owed, so water turnoffs have not been an issue in San Francisco.