Starting on January 1, 2013, any landlord who rents a unit on property containing one to four units must disclose to prospective tenants any receipt of a notice of a default if it has not been rescinded. The landlord must disclose the notice of default prior to executing the lease or rental agreement.
Violation of the law can be costly. If violated, the tenant can void the lease and recover one month’s rent or twice the amount of actual damages, whichever is great, and any prepaid rent. If the foreclosure has not occurred, the tenant may deduct one month’s rent from future rent owed.
The statutory notice as required by Civil Code Section 2924.85 must be in English, Spanish, Chinese, Vietnamese, Tagalog, and Korean. Pursuant to Section 2924.85, the notice must state:
“The foreclosure process has begun on this property, and this property may be sold at foreclosure. If you rent this property, and a foreclosure sale occurs, the sale may affect your right to continue to live in this property in the future. Your tenancy may continue after the sale. The new owner must honor the lease unless the new owner will occupy the property as a primary residence, or in other limited circumstances. Also, in some cases and in some cities with a “just cause for eviction” law, you may not have to move at all. In order for the new owner to evict you, the new owner must provide you with at least 90 days’ written eviction notice in most cases.”
A property manager is not liable under Section 2924.85 unless the landlord told him or her of the notice of default and directed the property manager to tell prospective tenants.