Renting Illegal Unit that was Recently Foreclosed on.

Hey Lara,

So you’re stuck renting an apartment (guest house) that is now in foreclosure, that stinks!! If the buyer is attempting to get you to move, it would most likely mean that the property is being sold as a short sale. A short sale is very different than a foreclosure. Short sales are when the bank agrees to sell a property for less than is owed. The option makes it easier for banks as it prevents them from having to go through the entire foreclosure process. If the unit was actually in foreclosure, you would have been approached by the bank directly with some type of notice to vacate. Since that hasn’t been done, that means that the property is not foreclosed upon yet.

Its funny you ask about whether you can ask for moving cost. When banks take back ownership of a property via foreclosure, they will always want to evict tenants ASAP. One technique used is to buy them out. Meaning that they offer you some money if you can move by a certain date. Otherwise, they would be required to go through the entire eviction process to get you out.

Since the property appears to be going through short sale, legally the new owners are obligated to honor your current lease agreement. They can’t force you out, just because they bought it. When you buy a property, you are required to honor any rental agreements that are in place. However, in your case they will most definitely not renew your lease and will also look for lease violations that can allow them to evict you. With all of that said, yes you have right to ask for the new buyers to pay you for moving cost. Let them know that you have the right to stay through the end of your contract, but if they are willing to pay you xxxx amount of money you will agree to move.

Be specific and ask for actual dollar amounts.

There is actually a new law in effect that protects tenants in this very situation. Its was part of the Protecting homes act and requires banks to give more advanced notice when kicking out tenants.

In your situation if you are dealing with a real estate agent and buyer, they would most likely not be allowed to kick you out. Remember, everything is negotiable. You can always ask for money, but don’t go overboard if you ask for the moon you will get nothing.

I lived in the same type of situation where my landlord lost his rental due to foreclosure. Pissed me off becuz I had to pay the bugger rent all while he wasn’t meeting his mortgage obligations. If the house was recently foreclosed on, expect to hear from the bank. I was forced to move out against my will. If you’ve got a chance to talk to someone, do what you can to protect yourself.

You should probably file a complaint with the RPA to see that your rights are being protected.

I was in a similar situation as you. The back house I was renting turned out to be an illegal unit as well as the whole property being in foreclosure status. From this ordeal, here’s what I found out. Foreclosure of the property has nothing to do with the tenant esp. now the tenants are propected by the new law in case of foreclosure. Illegal unit is a whole different story. I found out that under Gruzen v. Henry, the owner of illegal properties cannot collect any rent from the tenants. (They should not be renting out the properties in the first place. It IS illegal to do so.) If your landlord is evicting you, you might be able to ask for relocation fees from him. Go down to the LA Building & Safety to pull the documents (permit & certificate of occupancy) to verify the facts and call in the inspector to report property violation. You might be entilted to more than relocation costs. i.e. back rents, security deposit.. I found out all this after I moved out so I lost some of my rights. But you should really look into it while you are still there. Bestest will be to consult with an attorney. Good luck!

Is it illegal for a landlord knowing the property is going into foreclosure to rent that property to someone that does not know the home is going into foreclosure.I have rented a cottage and then after 2 months I found out that the home I’m renting has been in foreclosure status. I feel ripped off and lied to by the landlord. To me this is playing with someones life. Thank you in advance for the answer to this question.