If I have a written multi-year lease entered into by the owner before he took out a reverse mortgage, what happens to it if the owner dies?

UPDATED: Oct 2, 2022

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If I have a written multi-year lease entered into by the owner before he took out a reverse mortgage, what happens to it if the owner dies?

The lease was entered into prior to the owner encumbering the property with a reverse mortgage. My concern is that the reverse mortgage requires the property to be sold if the owner dies. What happens to my lease in this event? If the reverse mortgage company forecloses after the owner dies, can I stay in the building until my lease expires? Can I be evicted?

Asked on October 23, 2019 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Foreclosure cuts off all leasehold interests, since the person who gives you your rights, including the right to possess (occupy, live in, etc.) the property loses his or her right to the property; not having any rights any longer, he or she cannot give you any rights. This is the general rule or principal.
That said, your state (CA), like many states, has specifically enacted law(s) to protect innocent tenants. In CA, even if the property is foreclosed, you have the right to remain in the property until your lease end. Federal (national) law also gives you this right. There is a limited exception for if the person acquiring the property in foreclosure wishes to personally occupy (live in) it, but even in that case, they must bring a proper eviction action on that basis and you still get at least 90 days further residency--possibly more in the court's discretion or if the buyer is slow in taking action.

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