When we were doing our flips the most dicey thing was dealing with tenants who occupied properties that we purchased at auction. The laws that protect the tenants are pretty straightforward and are exactly as you stated.
You can correct me if I am wrong, but if I recall correctly, if the tenants have a copy of the previous lease, the new owners are indeed bound by that lease assuming it is a bona fide lease. There are several caviots defining that, primarly when the lease was generated in relation to the notice of trustee sale, as well as if the rent is market rate.
As you said, the general way to go about an eviction, (and if the lease is bona fide, and the tenants pay you the new landlord then you cannot evict until the lease term is up) is to go about it through the formal process as you explained above… Many newbee types in the flip game don’t understand the rules and try to bully tenants when in reality the tenants have alot of power if they know how to use it and can get a nice payout if they are positioned well by a pre-existing lease.
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I do have a great ethical story for you as well but it was not my transaction. Knew of a guy in a short sale. He had crappy representation. There were two loans… the second wanted 2500 from the buyer PRIOR to sending formal acceptance. Realtor didn’t know better and allowed him to do it however they waited until the last minute, sent the money in and the home went to foreclosure… that is not even the bad part…
The listing agent was using a third party short sale processor who worked for a broker. Another agent for THAT broker ended up buying the home at trustee sale. The original buyer who lost the 2500 ended up buying the home from the realtor who bought it at trustee sale for a little more then what they had it for during the short sale.
