If a landlordis losingtheir home to foreclosure, whatare a tenant’s rights to included utilities and or cash for keys?

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If a landlordis losingtheir home to foreclosure, whatare a tenant’s rights to included utilities and or cash for keys?

I was just informed by landlady is losing her home to either foreclosure or will file bankruptcy. I have done some research and realize that due to the “Protecting Tenants at Foreclosure Act” that whoever takes over the home- whether it’s sold or foreclosed on has to give me a 90 day notice to vacate if they want me to move. Or provide Cash for Keys if they want me to leave sooner. Are there any caveats to that? I rent month-to-month and also have utilities provided. Would the bank/new owner be responsible to provide those same amenities during that 90 day period?

Asked on February 11, 2011 under Real Estate Law, California

Answers:

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

Answered 10 years ago | Contributor

Cash for keys is an incentive that can be negotiated between a new owner and a tenant so that the tenant agrees to move out prior to the end of their lease, or 90 days, which ever applies.  In other words, an owner will pay a tenant to leave the property early in exchange for a cash payment.  The amount and timing of the payment is worked out on a case-by-case basis.  However, getting cash for keys is not an automatic right; this is a discretionary arrangement that a new owner may or may not want to offer a tenant.

As for your utilities, since they are included in your rent, then the new owner is responsible for providing them; just as you are responsible to continue to pay your rent until you vacate the premises.  As a practical matter I'd confirm all of this as soon as the auction sale takes place.  You want to make sure that you have no interruption in your utility service.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Legally, whomever is the new owner after the foreclosure has to provide the utilities; if  not, he, she, or it may be liable to the tenant for "constructive eviction," or improper eviction.

A tenant and a property's owner can always negoatiage some compensation for an early lease termination or move out--however, bear in mind that it IS a negotiation, not a right. If you can't work anything out mutually agreeable, the bank (or whomever) does not need to pay you.

Note also you may not have that much leverage, inasmuch as it is unlikely, in the real world, that any new owner will be in a position to do much with the property on day one. Given that, it may be that the easiest thing for a new owner is to immediately provide notice while taking care of any other logistics, marketing, financing, etc. that they need to do anyway.


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