If a property is foreclosed on by a bank and it is tenant occupied who is responsible for the tenant’s deposit?

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If a property is foreclosed on by a bank and it is tenant occupied who is responsible for the tenant’s deposit?

Asked on May 19, 2009 under Real Estate Law, California

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

The landlord is responsible for your security deposit but if his property is in foreclosure he has money problems and it's a good bet that you will not see that deposit.  However, there is possibly something that you can do. Until the foreclosure is completed, the Landlord is the legal owner and you are still responsible for making rent payments, if you do not you can be evicted.  But if you know approximately when the foreclosure is taking place you could stop paying rent the month before.  Even if the Landlord sued for eviction it would take about that long to get you out anyway.  Just make sure not to stop paying rent altogether.  Note:  You will want to keep that 1 months rent set aside.  If the Landlord is able to get his property out of foreclosure you may have to come up with that money.  So have it available.

Once the foreclosure is done, and if you have not been able to withhold 1 month's rent, then you would have to sue your Landlord for the amount of the security deposit.


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