Okay, so I looked up the laws a little more. The CA law has been superseded by a federal law Obama signed into law on May, 2009 (is that the best concrete thing he’s done so far?), which states that tenant of a foreclosed property has the right to stay until the end of the lease, or if it is month-to-month, then the renter has to be given at least 90-day notice by the new owner to move out. The only exception is if the new owner plans to move in and live there, then the new owner can terminate the lease with 90-day notice even if the original was for longer.
Since it’s a foreclosure property, majority of properties go to the lender, so they wouldn’t be living in it; I guess it is only the case if a third-party buys it at the courthouse, is that right?
I also found out that CA state laws state that the lease survives a sale (I suppose whether conventional or short), no exceptions as far as I can see.
So I talked to my landlord, and here’s his situation. Not only is he upside down on this unit but he’s undergoing divorce, and he is at break-even for his “primary residence” (which his separated wife refuses to move out of), as his equity was entirely canceled out by depreciation. The guy is just too nice, they separated 2.5 years ago, and he’s still paying all the mortgages, taxes, bills, and repairs at the house she wouldn’t move out of, while he rents a place with his new gf. The unit I’m renting he did 80/20, but it was neg-am, and now he owes $50K more than his purchasing price and is probably $150K+ over market value (60%). His lenders will apparently consider re-fi him on this, wipe out the 2nd; they seem more open to re-fi’s when there’s a divorce involved. So he’ll probably try to start the re-fi process soon, and that probably means he’ll have to miss a few payments first… He also just extended my lease by a month while he talks more with his lender.
He offered me to go on month-to-month, but I am still leaning toward signing a longer-term lease with him, even though he’s undergoing all his financial turmoil, given that my lease is protected whether it’s a sale or foreclosure. If the new owners refuse to repair the unit, I can always repair and deduct from rent myself under CA tenancy laws… And I think he will continue to be a good landlord, as he has been so far, as long as he is still the owner. Also, both short-sale and foreclosure will take a very long time to happen, especially given all the government interventions. And I think he’s far too under-water to do a regular sale. And in the worst case, if for some miraculous reason it happens quickly for this place, I would still have at least 90 days to find a new place.
Does anyone see any good reason that I shouldn’t try to persuade him for a long-term lease (at least 9 months)?
ETA: and oh, yeah, with SDR’s help I found out that he’s not officially delinquent yet. It’s actually kinda amazing he’s kept up the payments so far, given the two mortgages, an expensive wouldn’t-go-away-ex-wife to support, divorce lawyer bills, and reduced income (he’s a contractor).
