What Happens to a Tenant When the Rental Property Is Sold or Foreclosed in California?

When a landlord sells a rental property — or loses it to foreclosure — while tenants are living there, the tenants' rights and the rules governing any Unlawful Detainer (eviction) lawsuit depend on how the property changed hands, when the tenancy began, what kind of tenancy the tenant holds, and whether the change in ownership occurred before or after an eviction case was filed. This guide explains, with citations to the controlling California statutes and case law, how a sale or foreclosure affects a tenancy, what notice a new owner must give before evicting, and the defenses a tenant or former homeowner may raise in a postsale unlawful detainer action.

Part I — How a Sale Affects the Tenancy

1. Does the Sale of a Rental Property End the Tenant's Lease in California?

A sale generally has very little direct legal effect on a tenancy. The buyer (called the “grantee of the reversion” or the landlord's “successor in interest”) steps into the former landlord's shoes and acquires all of the former landlord's rights under the lease. Rosenkranz v. Pellin (1950) 99 Cal.App.2d 650, 652. The grantee becomes the landlord, and the tenant becomes the grantee's tenant. Commonwealth Memorial, Inc. v. Telophase Society of America (1976) 63 Cal.App.3d 867.

Under Civil Code § 821, a person who acquires real property on which rent is reserved (or who acquires the right to that rent) is entitled to the same remedies the prior owner had to recover rent, to enforce the terms of the lease, and to address waste or any cause of forfeiture.

2. Is an Unrecorded Lease Binding on the Buyer?

Under Civil Code § 1214, an unrecorded lease for a term of more than one year is not binding on a later purchaser who buys in good faith (that is, without notice of the lease) and records first. However, when the tenant is in possession, the purchaser is legally charged with notice of the tenant's interest. Scheerer v. Cuddy (1890) 85 Cal. 270. A buyer of occupied property therefore generally cannot claim to be a good-faith purchaser without notice of the tenancy.

3. Can the New Owner Evict Without the Tenant Agreeing to Accept the New Landlord?

Most provisions of CCP § 1161, the statute defining when a tenant is “guilty of unlawful detainer,” expressly apply both to the landlord and to the landlord's “successor in estate.” The landlord's successor may therefore maintain an eviction on those grounds without the tenant's attornment. Civil Code § 821; Civil Code § 1111; Wayland v. Latham (1928) 89 Cal.App. 55, 66; Plummer v. Agoure (1912) 20 Cal.App. 319 (successor could serve a 3-day notice to pay rent or quit and file an unlawful detainer without the tenant's attornment).

Paragraph (3) of CCP § 1161(3) — covering failure to perform conditions of the lease — is the only provision that does not expressly refer to the landlord. It authorizes a 3-day notice after a breach but does not say who must give it. Civil Code § 821 fills that gap by giving the new owner the same remedies for breach of the lease that the former owner had.

In Lee v. Kotyluk (2021) 59 Cal.App.5th 719, 726, the Court of Appeal held that new owners could file an unlawful detainer based on a CCP § 1161(3) notice the former owner had served on the tenant, even though that notice did not identify the person to whom the tenant could surrender possession. The court reasoned that Civil Code § 821 gave the new owners the same remedies as their predecessor, and that the Legislature deliberately chose not to require a CCP § 1161(3) notice to specify how possession should be restored. The court declined to read such a requirement into the statute.

4. What Happens If the Property Is Sold While an Unlawful Detainer Case Is Pending?

A sale has a definite legal effect when the landlord filed an unlawful detainer before selling. Upon the sale, the original landlord loses standing to pursue the action. Kirk Corp. v. First American Title Co. (1990) 220 Cal.App.3d 785, 809. The landlord's successor may be substituted for the landlord and continue the lawsuit. CCP § 740; Stockton Morris Plan Co. v. Carpenter (1936) 18 Cal.App.2d 205.

If the successor is not substituted and the former landlord continues to pursue the action, the plaintiff no longer has a right to possession and the case should fail. A tenant may raise this issue by demurrer (if the complaint shows the plaintiff is an improper plaintiff), by motion for summary judgment, or at trial.

5. What Notice Must a New Owner Give Tenants After a Sale in California?

A landlord's successor must give existing tenants notice of any change in ownership within 15 days of assuming ownership. Civil Code § 1962(c). The notice must include the name and contact information of the new owner, of any property manager, and of the person or entity to whom rent should be paid. Civil Code § 1962(a).

A successor owner may not evict a tenant “for nonpayment of rent that accrued during the period of noncompliance by a successor owner or manager.” Civil Code § 1962(c). The statute does not, however, “relieve the tenant of any liability for unpaid rent.” In practical terms, a tenant cannot be evicted for nonpayment of rent that came due while the tenant did not know of the ownership change, the new owner's identity, or where to pay — but the successor landlord may still sue to collect that back rent, for example in small claims court.

6. How Can a Tenant Confirm Who the New Owner Is and Whom to Pay Rent To?

Because Civil Code § 1962(c) places the burden on the successor landlord, a tenant who suspects an ownership change — or who questions whether a purported new landlord is entitled to rent — should research title by contacting the county recorder's office. A tenant may also:

1. Contact the former landlord to confirm who holds title;
2. Demand proof of ownership from the purported new landlord;
3. Look for signs at the building indicating that the property was sold; and
4. If the property is in the process of being sold, consider paying rent into the escrow account.

7. What Happens to the Security Deposit After a Sale or Foreclosure?

Deposit problems commonly arise when ownership passes through foreclosure. Within a reasonable time after the foreclosure sale, the former landlord must turn over existing tenants' security deposits to the successor and then give each tenant written notice stating the amount of the deposit and the name and contact information of the successor. Civil Code § 1950.5(i). If the former landlord fails to comply, both the former landlord and the successor are jointly and severally liable for the deposit. Civil Code § 1950.5(k). For a full explanation of deposit rules, see our guide to California security deposit laws.

Beyond a successor landlord's noncompliance with Civil Code § 1962 or Civil Code § 1950.5(i), a tenant may challenge a new owner's right to evict in several other circumstances, explained in Section 16, Section 17, and Section 18 below.

Part II — Evicting After a Sale: Notice Rules

8. Notice Periods After a Sale or Foreclosure at a Glance

The notice a new owner must serve depends on who the occupant is and whether the sale was voluntary or a foreclosure. Each row is explained in the sections that follow.

9. When Can a Buyer Use a 3-Day Notice to Quit After a Sale?

Under CCP § 1161a(b), a buyer may bring an unlawful detainer on a 3-day notice against certain occupants who refuse to leave after a sale of real property completed by any of the following methods:

• A writ of execution;
• Judicial foreclosure;
• A power of sale in a deed of trust (nonjudicial trustee's sale); or
• A voluntary sale.

The 3-day notice may be used only against (1) the former owner of the property, whether residential or commercial, or (2) a commercial tenant. Longer notice periods apply to other occupants, and some tenants are protected from immediate eviction after foreclosure (see Sections 10 through 13).

What does “duly perfected” title mean?

The occupant may be evicted only if the purchaser's title “has been duly perfected.” CCP § 1161a(b). The California Supreme Court has held that this requires the deed to be recorded before the new owner serves the 3-day notice to quit. Dr. Leevil, LLC v. Westlake Health Care Center (2018) 6 Cal.5th 474. See also U.S. Financial, L.P. v. McLitus (2016) 6 Cal.App.5th Supp. 1, 4 (approved and followed in Dr. Leevil); Salazar v. Thomas (2015) 236 Cal.App.4th 467, 480 (noting that once the trustee's deed is recorded, the purchaser may bring an unlawful detainer against the borrower).

The four elements the buyer must prove

CCP § 1161a is a technical statute that operates as an adjunct to CCP § 1161; it creates no new rights and merely provides additional remedies. Furlott v. Security First National Bank (1936) 14 Cal.App.2d 118; Mutual Building & Loan Assn. v. Corum (1934) 3 Cal.App.2d 56. A purchaser may therefore evict under CCP § 1161a(b) only if:

1. Title has been duly perfected in the purchaser;
2. The purchaser is entitled to possession;
3. The purchaser properly served a valid notice to quit on the occupant; and
4. The former owner or tenant has held over.

Johnson v. Hapke (1960) 183 Cal.App.2d 255, 259 (examining the perfection-of-title requirement where the former owner conveyed the property to a junior lender by deed in lieu of foreclosure). As plaintiff, the purchaser bears the burden of proving all four elements. Evidence Code § 500. See Section 15.

10. How Much Notice Is Required to Evict a Residential Tenant After a Voluntary Sale?

For residential tenants, the most important distinction is whether the sale resulted from a foreclosure. If the owner sold the property voluntarily, the new landlord cannot use a 3-day notice to evict the owner's tenant or subtenant; it must serve a written notice to quit “at least as long as the term of hiring itself but not exceeding 30 days.” CCP § 1161a(c).

By contrast, a 3-day notice must be used to evict a former owner from any type of property, or a former owner's tenant from commercial property, after a sale — assuming the buyer's title has been perfected. See Section 9. Where the buyer took title subject to an existing lease, the buyer simply becomes the landlord and cannot terminate the tenancy before the lease expires (see Section 16).

11. How Much Notice Is Required to Evict a Residential Tenant After a Foreclosure?

The notice rules after a sale have been complicated by legislation enacted during and after the Great Recession, the temporary nature of several of those laws, and the expiration of the federal Protecting Tenants at Foreclosure Act of 2009 (PTFA) at the end of 2014. Effective June 23, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (Pub. L. 115-174, § 304, 132 Stat. 1296) revived and restored the PTFA. The PTFA's text appears in the Historical and Statutory Notes to 12 U.S.C. § 5220 rather than in the codified U.S. Code.

After a foreclosure (involuntary) sale, one of three rules generally applies to a residential tenant or subtenant:

1. 30-day notice under CCP § 1161a(c), for tenants who do not qualify for a longer period (see below);
2. 90-day notice, or the right to remain through the term of an existing lease, under CCP § 1161b(a)–CCP § 1161b(b) — state legislation that mirrors the federal PTFA (see Section 12 and Section 13); or
3. The right to remain until a non-foreclosure “just cause” exists, under a local ordinance. In 15 California cities, foreclosure is not a recognized cause for eviction. See Section 20.

When the 30-day notice applies

Successor owners must serve a 30-day notice to quit — whether the sale was voluntary or not — on existing tenants who do not qualify for a longer notice period under state foreclosure law, such as tenants or subtenants holding over in residential property along with a party to the promissory note (CCP § 1161a(d)), or tenants and subtenants who were not already in possession under a month-to-month tenancy at the time of the foreclosure sale (CCP § 1161b(a)). See CCP § 1161a(c).

In HSBC Bank v. Allenson (Sept. 18, 2013, AD-5350) [nonpub. opn.] 2013 WL 5917515, tenants who lived with the former homeowner were not given a 30-day notice. The appellate division reversed the unlawful detainer judgment but did not restore possession; it remanded for the trial court to award the tenants damages for the time lost because of the improper notice. Because of the Homeowner Bill of Rights (Stats. 2012, ch. 86) and related legislation (such as Stats. 2012, ch. 562), the 30-day notice is now most commonly applied to tenants who occupy the property together with the former homeowner.

How the 90-day notice developed

Before the Great Recession, a residential month-to-month tenant was entitled to a 30-day termination notice after foreclosure under CCP § 1161a(c). From July 8, 2008 until January 1, 2013, a temporary statute, CCP § 1161b(a), required a 60-day written notice to quit for a tenant or subtenant in possession at the time of the foreclosure sale. Today, CCP § 1161b(a) requires 90 days’ written notice for a tenant or subtenant in possession of a rental housing unit under a month-to-month lease or periodic tenancy at the time of the foreclosure sale. A 2012 amendment, effective January 1, 2013, increased the period to 90 days, which permanently supersedes the 30-day notice of CCP § 1161a(c) for these residential tenants.

When the 90-day notice does not apply

The 90-day requirement does not apply if any party to the promissory note remains in the property as a tenant, subtenant, or occupant. CCP § 1161b(d). In that situation, a 3-day notice is required to evict the borrower under CCP § 1161a(b), and a 30-day notice is required to evict other tenants or subtenants who live at the property with the borrower.

State law provisions allowing a new owner to evict a residential tenant on specified notice are subject to the limits of local eviction control ordinances. See Section 20. Failure to serve the required notice is a defense to the unlawful detainer action.

12. Does a Fixed-Term Lease Survive Foreclosure in California?

Under CCP § 1161b(b)(1)–(4), residential tenants or subtenants in possession under a fixed-term lease entered into before the transfer of title at the foreclosure sale have the right to possession until the lease terminates. The tenancy cannot be terminated after the foreclosure sale even if a building inspector orders the tenant to vacate because of unsafe conditions. Erlach v. Sierra Asset Servicing, LLC (2014) 226 Cal.App.4th 1281, 1292.

When a fixed-term lease can be ended on 90 days' notice

Even a fixed-term tenancy may be terminated by a 90-day written notice to quit under CCP § 1161b(a) if any of the following applies:

1. The purchaser or successor in interest will occupy the unit as its primary residence;
2. The tenant is the borrower on the defaulted loan, or the borrower's child, spouse, or parent;
3. The lease was not the result of an arm's-length transaction; or
4. The rent under the lease “is substantially less than fair market rent for the property,” unless the rent is reduced or subsidized under “a federal, state, or local subsidy or law.”

The purchaser or successor bears the burden of proving that a fixed-term residential lease is not entitled to protection under CCP § 1161b(b). CCP § 1161b(c). Nothing in CCP § 1161b is intended to affect any local just cause ordinance that prohibits eviction after foreclosure, or the authority of a local public entity that regulates or monitors the grounds for eviction. CCP § 1161b(e).

13. What Is the Federal Protecting Tenants at Foreclosure Act (PTFA)?

California's postforeclosure notice periods are partially preempted by the Protecting Tenants at Foreclosure Act of 2009 (Pub. L. 111-22, §§ 701–704, 123 Stat. 1632), enacted and first effective May 20, 2009. The PTFA was originally set to expire at the end of 2012, was extended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, § 1484, 124 Stat. 1376) through December 31, 2014, and then expired. Effective June 23, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (Pub. L. 115-174, § 304, 132 Stat. 1296) revived and restored it. Because its text appears in the notes to 12 U.S.C. § 5220 rather than in the Code itself, the PTFA is usually cited by the section numbers of Pub. L. 111-22.

The PTFA provides:

• A right to 90 days' notice of eviction after foreclosure. PTFA § 702(a)(1).
• A right for tenants with leases to occupy the property until the end of the lease term, except that the lease may be terminated on 90 days' notice if the unit is sold to a buyer who will occupy it as a primary residence. PTFA § 702(a)(2)(A), partially codified for federally subsidized housing at 42 U.S.C. § 1437f(o)(7)(C).
• A lease survives the foreclosure if it was entered into before the “notice of foreclosure,” which the PTFA (as amended) defines as the date title transferred to the buyer at the foreclosure sale. Pub. L. 111-203, § 1484, 124 Stat. 1376.

For the most part, CCP § 1161b and local just cause ordinances give California tenants more protection than the PTFA, with some exceptions.

Can a tenant sue for a PTFA violation?

The Ninth Circuit held that the PTFA does not create a private right of action — that is, a tenant cannot file an affirmative federal lawsuit against the new landlord for violating it. Logan v. U.S. Bank (9th Cir. 2013) 722 F.3d 1163, 1172. A California Court of Appeal agreed with Logan but held that PTFA violations may support an affirmative state-law claim for breach of contract or wrongful eviction. Nativi v. Deutsche Bank (2014) 223 Cal.App.4th 261, 284. The court reasoned that if the PTFA could be raised only defensively, bona fide tenancies surviving foreclosure would be largely unprotected, and successors could interfere with tenants' possession with impunity so long as they never filed an eviction. See also Mik v. Federal Home Loan Mortgage Corp. (6th Cir. 2014) 743 F.3d 149 (the PTFA preempts less protective state law, and PTFA violations can establish state-law wrongful eviction claims).

Nativi also held that the landlord-tenant relationship “survives foreclosure” under PTFA § 702, transferring the rights and obligations under the lease to the new landlord. The new landlord argued that the lease was void because the rented garage was an illegally converted unit; the court rejected the argument, holding that the PTFA's “protective purpose to prevent abrupt dispossession of tenants as a result of foreclosure would be frustrated” if it did not apply to illegal units. 223 Cal.App.4th at 286.

Although Nativi involved a failure to honor a fixed-term lease, tenants can use its reasoning to prevent foreclosing entities from arguing that they are not a “successor” for purposes of laws governing repairs and security deposits. Because the immediate successor after foreclosure takes title subject to tenants' rights under the existing rental agreement (PTFA § 702), it will likely have difficulty denying liability under those laws, at least where the tenancy is covered by the PTFA. Not all courts agree: in Roberts v. Bartels (N.D. Cal., Nov. 25, 2013, No. C 12-06119 SBA) 2013 U.S. Dist. Lexis 167718, the court held that because the tenants had paid no rent to the foreclosing defendant, no PTFA landlord-tenant relationship existed, so the defendant was not liable for disconnecting utilities or breaching the warranty of habitability.

14. What Notices Must Tenants Receive Before a Foreclosure Sale?

Since April 1, 2012, a notice of sale under a deed of trust secured by real property containing one to four single-family residences must include (1) language warning potential bidders of the risks of bidding at a trustee's sale and (2) a notice to the owner about obtaining a postponement. Since January 1, 2021, the notice of sale must also include a specified notice to the tenant about the tenant's potential eligibility to purchase the property after the trustee's auction. Civil Code § 2924f(b)(8)(A). This provision was scheduled to sunset on January 1, 2026, but has been extended to January 1, 2031.

A mortgagee, beneficiary, trustee, or authorized agent must make good faith efforts to provide current information about “sale dates and postponements to persons who wish this information.” Civil Code § 2924f(b)(8)(B). The trustee or its agent must maintain a website and telephone number providing the sale date, the last and highest bid amounts, and the trustee's address, available free of charge 24 hours a day, 7 days a week. Civil Code § 2924f(b)(8)(E).

Separate notice to occupants

Since March 1, 2021, when the billing address for the note differs from the property address, the trustee or authorized agent must post and mail by first-class mail an additional notice to the occupants of residential real property at the same time the notice of trustee's sale is mailed. Civil Code § 2924.8(d). The notice must be given at least 20 days before the scheduled sale. Civil Code § 2924f(b)(3); Civil Code § 2924.8(a). It is designed to communicate the urgency and seriousness of the foreclosure to residential tenants. The current statute is identical to the former Civil Code § 2924.8, which expired December 31, 2019 without being extended.

Civil Code § 2924.8 does not state what happens if the trustee fails to give this notice, or whether the failure is a defense to a later unlawful detainer. Arguably, under Cheney v. Trauzettel (1937) 9 Cal.2d 158, 160, and Bank of New York Mellon v. Preciado (2013) 224 Cal.App.4th Supp. 1, a tenant may defend the eviction by denying in the answer that the foreclosure sale was properly conducted, because the plaintiff bears the burden of proof on that issue. Cheney held that in a postforeclosure eviction, the plaintiff-purchaser must prove that the sale complied with the statutes and the deed of trust, followed by a valid purchase at the sale, and that the occupant may raise objections on that aspect of title. The defendant in Cheney was the former homeowner, not a tenant; in Preciado, both the former homeowner and postforeclosure tenants appealed, and the appellate division reversed the eviction because the plaintiff had not proven duly perfected title. Preciado makes clear that tenants and former homeowners can defend by asserting that the plaintiff has not proven the elements of its case, including duly perfected title.

Part III — Defending a Postsale Unlawful Detainer

15. What Must the New Owner Prove to Evict After a Sale or Foreclosure?

A purchaser may evict under CCP § 1161a or CCP § 1161b only if (1) title has been duly perfected in the purchaser, (2) the purchaser is entitled to possession, (3) the purchaser properly served a valid notice to quit on the occupant, and (4) the former owner or tenant has held over. Johnson v. Hapke (1960) 183 Cal.App.2d 255, 259. As plaintiff, the purchaser bears the burden of proving each element. Evidence Code § 500.

Proving title and right to possession after foreclosure

To satisfy the first and second elements, a purchaser at a foreclosure sale must show compliance with the procedural and substantive foreclosure requirements of Civil Code § 2924. See CCP § 1161a(b)(3); Vella v. Hudgins (1977) 20 Cal.3d 251, 255; Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 1010; Aurora Loan Services v. Brown (July 31, 2012, ACIAS 1100008) [nonpub. opn.] 2012 WL 6213737 (appellate division applying CCP § 1161a(b)(3)).

Proving proper service of the notice to quit

To satisfy the third element, the purchaser must show that each notice to quit was properly served, in this order: (1) by personal service; (2) if personal service fails, by substituted service plus mailing a copy; or (3) if both fail, by posting the notice at the residence and mailing a copy. CCP § 1162. Tenants and former homeowners may use improper service as a defense. Opes Investments, Inc. v. Yun, supra (reversing summary judgment for the plaintiff, which alleged but offered no evidence that the occupants were properly served).

16. When Does a Tenant's Lease Take Priority Over the New Owner?

Voluntary sale

If a tenant has a fixed-term lease, the landlord's voluntary sale does not by itself cancel the lease. Rosenkranz v. Pellin (1950) 99 Cal.App.2d 650.

Some leases contain a clause terminating the lease upon a voluntary sale. Such clauses are usually enforceable in commercial leases but are not enforceable in cities with eviction control ordinances (see Section 20).

Foreclosure (involuntary sale)

After a foreclosure, only a tenant whose interest is subordinate to the foreclosed mortgage can be evicted under CCP § 1161a or CCP § 1161b — and even then, not if the tenancy is a residential tenancy in an eviction-controlled jurisdiction.

A lease signed before the mortgage is superior to the mortgage unless the lease was subordinated to it by agreement. A lender that takes a deed of trust on leased property without a subordination agreement acquires a lien only on the owner's reversionary interest. Fahrenbaker v. E. Clemens Horst Co. (1930) 209 Cal. 7. Foreclosure conveys to the purchaser only that same reversion. Calidino Hotel Co. v. Bank of America Nat. Trust & Sav. Assn. (1939) 31 Cal.App.2d 295. The purchaser therefore cannot evict the tenant, and the tenant cannot escape its obligations under the lease; the purchaser becomes the new landlord, entitled to rent as it comes due. Fahrenbaker, supra.

A lease's original priority may be affected if the lease is later amended after a deed of trust has been recorded against the landlord's title.

If the lease has priority over the foreclosed mortgage, the tenant has a complete defense to the postforeclosure eviction, as long as the tenant is not in default under the lease. R-Ranch Markets #2, supra.

In Home Savings & Loan v. Piggee (S.F. Super. Ct., App. Dept., Nov. 23, 1981, No. 3833), the owner and lessor sold the property to a buyer who gave a deed of trust to the plaintiff lender; the property was subject to San Francisco's rent control ordinance. The lessee held a 10-year lease and was not a party to the sale or the deed of trust. When the lender foreclosed and tried to evict the lessee under CCP § 1161a, the court held that the lender took the property subject to the lease and could not evict under CCP § 1161a. The court also rejected the lender's argument that the unrecorded lease had no priority over its recorded deed of trust under Civil Code § 1214: the lessee's continuous residence gave constructive notice of the lessee's claim (citing Evans v. Faught (1965) 231 Cal.App.2d 698, 705, and Scheerer v. Cuddy (1890) 85 Cal. 270), so the lender was not a bona fide purchaser protected by CC § 1214.

17. Can a Tenant Challenge the New Owner's Title in an Unlawful Detainer?

To evict under CCP § 1161a or CCP § 1161b, a plaintiff who bought the property voluntarily or at a trustee's sale (or who bought from that purchaser) must prove (1) that the sale was valid or was conducted in compliance with the foreclosure requirements of Civil Code § 2924, (2) duly perfected title, (3) that it gave the former homeowner and any existing tenants the proper notices to quit, and (4) that the occupants are holding over. Noncompliance with any one of these elements is a complete defense. Most title challenges in postsale evictions arise after foreclosure.

Challenges to loan assignments and authority to foreclose

When defects render a mortgage loan assignment void, a borrower may challenge the defective assignment of the note and deed of trust to the foreclosing party in a wrongful foreclosure action, even though the borrower was not a party to the assignment. Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 935; Sciarratta v. U.S. Bank (2016) 247 Cal.App.4th 552 (following Yvanova). More recent cases addressing the narrower issue of assignments that merely fail to comply with a trust agreement hold that such assignments are voidable, not void. Yhudai v. IMPAC Funding Corp. (2016) 1 Cal.App.5th 1252; Saterbak v. JPMorgan Chase Bank (2016) 245 Cal.App.4th 808. But where a valid assignment results in a void foreclosure because the prior beneficiary, after the assignment, forecloses through the predecessor trustee under the prior deed of trust, a quiet title action against the purchaser is appropriate. Yashouafar v. Elkwood Associates, LLC (Bankr. C.D. Cal., Jan. 25, 2019, No. 1:16-bk-12255-GM) 2019 Bankr. Lexis 255.

Forcing a bank to prove ownership of the mortgage is arguably required in the unlawful detainer, or the defense may be waived. Civil Code § 2924(a)(6) requires the foreclosing entity to hold the mortgage or deed of trust, or to be authorized to foreclose, before beginning a nonjudicial foreclosure. See Yvanova, supra, 62 Cal.4th at 941, fn. 14. Some advocates report dismissals of bank-filed unlawful detainers when occupants (former owners or tenants) challenge title or authority to foreclose and serve discovery on those issues.

Does the eviction judgment bar a later title lawsuit?

Because the title inquiry under CCP § 1161a is so restricted, tenant attorneys argue that the unlawful detainer should have no res judicata effect on a later action contesting title on grounds unrelated to compliance with trustee's sale procedures under CC § 2924 — such as a wrongful foreclosure or quiet title action based on fraud in the loan transaction or invalidity of the loan and deed of trust. See Vella v. Hudgins (1977) 20 Cal.3d 251; Gonzales v. Gem Properties (1974) 37 Cal.App.3d 1029; Wood v. Herson (1974) 39 Cal.App.3d 737.

Not all courts agree. Many grant a bank's motion to dismiss, or sustain its demurrer, in a later wrongful foreclosure case, citing the bank's proof of “duly perfected title” in the unlawful detainer — even where the defendant (usually the former homeowner) did not raise invalidity of the sale in the eviction but could have. See, e.g., Moreno v. Fannie Mae (C.D. Cal., July 13, 2015, No. 2:15-cv-00199-ODW) 2015 U.S. Dist. Lexis 97076 (the unlawful detainer judgment granting possession showed the court necessarily adjudicated the propriety of the sale); Hopkins v. Wells Fargo Bank (E.D. Cal., May 22, 2013, No. 2:13-00444 WBS JFM) 2013 U.S. Dist. Lexis 72803 (barring the former homeowner's wrongful foreclosure and wrongful eviction claims based on noncompliance with CC § 2923.5, because the bank had already established duly perfected title in the eviction); Malkoskie v. Option One Mortgage Corp. (2010) 188 Cal.App.4th 968, 973 (same reasoning).

Title challenges outside the foreclosure context

Outside the postforeclosure setting, a tenant without a priority interest (see Section 16) will find it difficult to challenge the landlord's title. Evidence Code § 624; Tewksbury v. Magraff (1867) 33 Cal. 237 (lessee barred from asserting title as a defense in an ejectment action because the lessee did not show sufficient facts establishing an interest in fee, which contradicted the lessee's possessory interest). If the landlord first puts title at issue by filing a quiet title action against the tenant, however, the tenant may raise the landlord's lack of title defensively in the unlawful detainer. Greenhut v. Wooden (1982) 129 Cal.App.3d 64; see Yuba River Sand Co. v. City of Marysville (1947) 78 Cal.App.2d 421, 425 (cross-actions between landlord and tenant to quiet title).

Apart from sale-compliance issues, priority disputes, and procedural defenses, title is generally not at issue in an unlawful detainer and must be pursued, if at all, in a separate quiet title action. Stephens, Partain & Cunningham v. Hollis (1987) 196 Cal.App.3d 948, 952; Evans v. Superior Court (1977) 67 Cal.App.3d 162. Where title is properly at issue, defenses may be raised against the claims of title. Kessler v. Bridge (1958) 161 Cal.App.2d Supp. 837. See also Vella v. Hudgins, supra; Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982 (prior owners evicted in an earlier action failed to state a quiet title claim against the purchaser but did state a claim against the banks for unfair business practices in enforcing an unconscionable loan and foreclosing on a loan they did not own); California Livestock Production Credit Assn. v. Sutfin (1985) 165 Cal.App.3d 136, 140, fn. 2 (“the unlawful detainer defendant may litigate the issue of the purchaser's title to the limited extent that he may show title was not duly perfected under the statutes”); Asuncion v. Superior Court (1980) 108 Cal.App.3d 141.

18. What Defenses Are Available in a Postforeclosure Eviction in California?

Lack of duly perfected title

Until 2013, it was unclear whether a postforeclosure tenant could challenge the landlord's title in a CCP § 1161a unlawful detainer. Bank of New York Mellon v. Preciado (2013) 224 Cal.App.4th Supp. 1 answered the question, allowing tenant defendants to overturn their eviction because the bank could not show duly perfected title. A nonborrower tenant may also raise an improper foreclosure sale as a defense on the theory that the lease would otherwise still be in effect. Civil Code § 1708; Schubert v. Lowe (1924) 193 Cal. 291; see Pike v. Hayden (1950) 97 Cal.App.2d 606; Rishwain v. Smith (1947) 77 Cal.App.2d 524.

Preciado also strongly supports former owners challenging a foreclosing entity's title in the CCP § 1161a process: the former homeowner appealed as well, and the court reversed on the same ground. Although unlawful detainer plaintiffs should have to affirmatively prove compliance with CCP § 1161a, most appellate courts will overturn an eviction only when the defendant offers some evidence of noncompliance. In Preciado, the defendants showed that the deed of trust and the trustee's deed upon sale named different trustees. See also Opes Investments, Inc. v. Yun (July 16, 2014, 30-2013-661818) [nonpub. opn.] (reversing summary judgment where the trustee's deed and the complaint named different entities as the purchaser and the plaintiff offered no evidence that the sale complied with Civil Code § 2924); in Opes, both the former homeowner and the tenants appealed.

Even before Preciado, California courts held that former owners may litigate title in an unlawful detainer when they can show fraud or noncompliance with nonjudicial foreclosure procedures. Cheney v. Trauzettel (1937) 9 Cal.2d 158, 160; Old National Financial Services, Inc. v. Seibert (1987) 194 Cal.App.3d 460; Mehr v. Superior Court (1983) 139 Cal.App.3d 1044; Asuncion v. Superior Court (1980) 108 Cal.App.3d 141; Abrahamer v. Parks (1956) 141 Cal.App.2d 82.

Improper foreclosure procedure and the presumption of regularity

Former owners and tenants may challenge noncompliance with foreclosure procedure statutes, but must overcome the rebuttable presumption that all procedures were followed, which arises when a trustee's deed upon sale is properly recorded. For bona fide purchasers, the presumption is conclusive. Civil Code § 2924(c). Without contrary evidence, the presumption is difficult to overcome. See, e.g., Wells Fargo Bank v. Detelder-Collins (Mar. 28, 2012, APP10000325) [nonpub. opn.] 2012 Cal.App.Unpub. Lexis 9499 (appellate division accepting the trial court's finding that the borrower's claim of never receiving foreclosure notices was not credible). Importantly, the presumption does not apply to the requirement of mortgage ownership or authority to foreclose under Civil Code § 2924(a)(6).

Defective or improperly served notice to quit

Former owners and tenants may defend by asserting that the plaintiff has not shown proper service of a valid notice to quit. Bank of New York Mellon v. Preciado, supra (reversing the eviction because the plaintiff used the “nail and mail” method before attempting personal service, violating CCP § 1162); Opes Investments, Inc. v. Yun, supra.

After a completed foreclosure, CCP § 1161b, in effect since July 8, 2008, alters the notice periods in CCP § 1161a, which has long required a 3-day notice to a former owner or commercial tenant and a 30-day notice to a residential tenant or subtenant. Under CCP § 1161b(a), a tenant or subtenant in possession of a rental housing unit under a month-to-month lease or periodic tenancy at the time of a foreclosure sale must receive a 90-day written notice to quit, served under CCP § 1162, before being removed, unless a party to the note remains a tenant, subtenant, or occupant. CCP § 1161b(d). Failure to comply is a defense to the unlawful detainer. See Section 11.

Separate title lawsuit, stay, and consolidation

Because the case law is unsettled, a former homeowner may, instead of litigating title in the eviction, file a separate action against the foreclosing lender alleging lender liability or defective title and ask the court to stay the unlawful detainer. A former homeowner with an affirmative case already pending should consider a motion to consolidate it with the unlawful detainer. Some eviction courts hold that defendants cannot litigate title in an unlawful detainer, even under CCP § 1161a; consolidating with a pending wrongful foreclosure or quiet title action allows title to be fully litigated. Martin-Bragg v. Moore (2013) 219 Cal.App.4th 367, 395 (former homeowner who had transferred the home into a trust was prejudiced by the court's refusal to consolidate the unlawful detainer with an affirmative quiet title action). This strategy may also avoid the res judicata problem that can arise when a former homeowner loses the unlawful detainer and then files a wrongful foreclosure or quiet title action.

Bankruptcy

A former owner (trustor) who qualifies for bankruptcy relief may file a petition and contest the validity of the foreclosure sale in opposing the purchaser's motion for relief from the automatic stay. See, e.g., In re Gonzalez (Bankr. C.D. Cal. 2011) 456 B.R. 429 (postpetition execution and delivery of the trustee's deed was invalid even though the sale occurred prepetition; stay relief to pursue the unlawful detainer denied). But see In re Svacina (Bankr. C.D. Cal. 2020) 618 B.R. 852, 856 (noting cases upholding prepetition trustee's sales where the trustee's deed was recorded postpetition but within the statutory time periods); US Bank v. Skelton (In re Salazar) (Bankr. S.D. Cal. 2011) 448 B.R. 814, revd. (S.D. Cal. 2012) 470 B.R. 557 (the bankruptcy court invalidated a prepetition sale because the bank, both foreclosing assignee and purchaser, had not recorded its interest before the sale; the district court reversed, following a California Court of Appeal ruling that the assignment-recording requirement does not apply to deeds of trust).

Attempts by occupants in bankruptcy to remove postforeclosure unlawful detainer actions to bankruptcy court have had limited success. See, e.g., Great Western Capital v. Copelin (In re Copelin) (Bankr. C.D. Cal., June 20, 2014, No. 2:14-ap-01175-RK) 2014 Bankr. Lexis 2723; Eden Place, LLC v. Perl (In re Perl) (9th Cir. 2016) 811 F.3d 1120 (a debtor whose ownership was terminated by foreclosure has no legal or equitable interest in the property once a state court issues an unlawful detainer judgment and writ of possession under CCP § 1161a).

No collateral attack on the sheriff or county offices

An evicted borrower may not collaterally attack the eviction by suing the sheriff, county recorder, or county clerk. In Lyons v. Santa Barbara County Sheriff's Office (2014) 231 Cal.App.4th 1499, a borrower sued county offices after a nonjudicial foreclosure and an eviction under a writ of possession, alleging the underlying documents were fraudulent; the dismissal was affirmed as an improper collateral attack.

Military service protections

A trustor who is a member of the military may be protected from an eviction judgment after foreclosure; a stay of the action or continuance of trial may be discretionary or mandatory depending on the facts. Mil. & Vet. Code § 406–Mil. & Vet. Code § 408; Servicemembers Civil Relief Act (SCRA), 50 U.S.C. §§ 3901–4043, specifically 50 U.S.C. §§ 3951–3959. The SCRA also invalidates a foreclosure sale of real property for nonpayment of the secured loan if conducted while the trustor is in military service or within one year after service ends, unless made under a court order or a valid written agreement; the trustor may obtain equitable relief for a violation. 50 U.S.C. § 3953(b)–(c); 50 U.S.C. § 4042. To qualify, the obligation must have originated before the servicemember entered military service. 50 U.S.C. § 3953(a)(1). No reported case has held that such a violation makes a California foreclosure sale void or voidable, but under 50 U.S.C. §§ 3953(c) and 4042, and the reasoning of Cheney and Preciado, the improper foreclosure is arguably both a defense to the eviction and a basis to set aside the sale.

Other rules affecting postforeclosure defenses

• Retaliatory eviction. One Court of Appeal held that the retaliatory eviction defense is unavailable when the unlawful detainer is based on a foreclosure purchase, because no prior landlord-tenant relationship existed between the parties. California Livestock Production Credit Assn. v. Sutfin (1985) 165 Cal.App.3d 136, 142.
• Lease survival. A California Court of Appeal has confirmed that a lease survives foreclosure. Nativi v. Deutsche Bank (2014) 223 Cal.App.4th 261 (see Section 13).
• Owner move-in under rent control. When a foreclosure purchaser seeks eviction for “good faith” owner occupancy under a rent control law, it may have to prove the required percentage of ownership. If the unit is subject to local eviction control, the lender may not evict unless the ordinance permits eviction after foreclosure. Gross v. Superior Court (1985) 171 Cal.App.3d 265.
• Claim of right to possession. A residential tenant not named in the lawsuit may join the unlawful detainer as a defendant by filing a prejudgment or postjudgment claim of right to possession. In one appellate division case, the court granted a writ ordering the trial court to grant a tenant's postjudgment claim of right to possession because the tenant's fixed-term lease survived foreclosure under CCP § 1161b. Manis v. Superior Court (Apr. 26, 2013, 1-13-AP-001491) [nonpub. opn.] 2013 Cal.App.Unpub. Lexis 9493.
• Cross-complaint. Title issues may in some circumstances be resolved in the unlawful detainer on a cross-complaint.

19. Does an Eviction Judgment Bar a Later Lawsuit to Set Aside the Foreclosure Sale?

A judgment for the purchaser in an unlawful detainer is not necessarily res judicata and should not bar a later affirmative suit by the former owner or a tenant to set aside the sale or recover damages, if the basis of the later suit falls outside the scope of CCP § 1161a–1161c. Cheney v. Trauzettel (1937) 9 Cal.2d 158; Byrne v. Baker (1963) 221 Cal.App.2d 1; Patapoff v. Reliable Escrow Service Corp. (1962) 201 Cal.App.2d 484; see Gonzalez v. Toews (2003) 111 Cal.App.4th 977.

An unlawful detainer judgment has collateral estoppel or res judicata effect only on issues actually raised, or that clearly could have been raised, in the eviction. Vella v. Hudgins (1977) 20 Cal.3d 251 (judgment after a trustee's sale was not res judicata because there was no trial transcript and the record contained no findings on the lender-fraud defense); Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 1010; Gonzales v. Gem Properties (1974) 37 Cal.App.3d 1029 (no res judicata where the plaintiff had no opportunity to fully litigate title).

20. Do Local Just Cause Ordinances Protect Tenants After Foreclosure?

Where a local ordinance requires the landlord to show just cause to evict and its definition of just cause does not include purchase at a foreclosure sale, the purchaser may not invoke CCP § 1161a or CCP § 1161b to evict a residential tenant. Gross v. Superior Court (1985) 171 Cal.App.3d 265. The Gross court rejected arguments that CCP § 1161a preempted the ordinance, that the ordinance unconstitutionally impaired contracts, and that the ordinance was not meant to require a showing of good cause from someone who did not choose to become a landlord.

When the Legislature lengthened the postforeclosure notice period to 60 days (effective July 8, 2008) and then to 90 days (effective January 1, 2013), it expressly stated that the law was not “intended to affect any local just-cause eviction ordinance.” CCP § 1161b(e).

California has many jurisdictions with just cause for eviction laws. Although these ordinances vary considerably, none recognizes foreclosure as a basis for evicting a residential tenant. Because many were adopted alongside local rent control ordinances, “just cause” and “rent control” are sometimes used interchangeably when describing local protections for tenants in foreclosure.

Tenants and advocates should confirm whether a particular city's postforeclosure just cause protections apply only to units in rent-controlled buildings. At least two cities, San Francisco and Los Angeles, have expanded just cause protections to certain residential buildings not covered by rent control. S.F. Admin. Code § 37.9D; L.A. Mun. Code, ch. XVI, art. 5, § 165.04. In 2020, however, San Francisco narrowed its protections so that postforeclosure protections no longer apply to units otherwise exempt from the city's eviction control ordinance. S.F. Admin. Code § 37.9D(b). A list of local ordinances is maintained by Tenants Together, and the National Housing Law Project provides reference material on which ordinances protect only rent-controlled units and which extend further. See also our guide to the statewide California Tenant Protection Act (AB 1482).

21. Do Section 8 Protections Survive Foreclosure?

Section 8 notice and termination requirements should survive foreclosure. In EMC Mortgage Corp. v. Smith (Mass. Boston Housing Ct., Jan. 4, 1996, No. 95-SP-04794), the court held that the Section 8 notice and termination provisions (42 U.S.C. § 1437f) preempt the Massachusetts common law rule that foreclosure automatically terminates tenancies. There are no published federal cases in California directly on point.

During the lease term, a voucher tenant may not be evicted except for good cause based on the tenant's actions. After the lease term, a landlord generally may evict a Section 8 tenant for an “other business or economic reason,” but no case has decided whether foreclosure qualifies; if challenged, the owner would bear the burden of proving the business or economic reason. A 90-day notice is required for such an eviction. Civil Code § 1954.535; Wasatch Property Management v. Degrate (2005) 35 Cal.4th 1111 (90-day notice applies in both just cause and non-just cause jurisdictions). The PTFA (Pub. L. 111-22, §§ 701–704, 123 Stat. 1632, 1661) also amended 42 U.S.C. § 1437f(o)(7) to add protections for Section 8 tenants after foreclosure (see Section 13).

22. Do Banks and Mortgage Companies Have Their Own Postforeclosure Tenant Policies?

In December 2008, Fannie Mae announced a policy on evicting tenants after foreclosure that eventually became its Tenant-in-Place Rental Program, which can provide qualified tenants with relocation assistance or a new lease with Fannie Mae. Freddie Mac adopted a policy of continuing to rent to tenants after foreclosure in some circumstances, and JPMorgan Chase has stated that it offers a rental option to tenants in its properties. Fannie Mae, Freddie Mac, JPMorgan Chase, Citigroup, and Nationstar — but not Wells Fargo Bank, the nation's largest mortgage servicer at the time — indicated they would voluntarily comply with the PTFA. Because these are voluntary policies that can change, tenants should confirm the lender's current policy directly.

23. What Can a Tenant Do If Utilities Are Shut Off After a Foreclosure?

When a foreclosed property's utilities were included in the rent and paid by the landlord-borrower, service may be terminated for nonpayment. After the foreclosure, the new owner — a third party or the lender — may be unsure of its duties, may not know whether the prior landlord agreed to pay utilities, or may simply refuse its obligations as owner. In early 2008, some California utilities began allowing tenants to open separate accounts to prevent or restore service, but many required tenants, particularly in single-family homes, to pay the prior owner's delinquent balance first.

Under Civil Code § 1942.2, a tenant who pays a utility provider under Pub. Util. Code § 777, Pub. Util. Code § 777.1, Pub. Util. Code § 10009, Pub. Util. Code § 10009.1, Pub. Util. Code § 12822, Pub. Util. Code § 12822.1, Pub. Util. Code § 16481, or Pub. Util. Code § 16481.1, or pays a district under Gov. Code § 60371, “may deduct the payment from the rent as provided in that section.” Where utilities were originally included in the rent, there is also an argument that the tenant may deduct future utility payments from rent because basic utilities are essential to habitability (see our guide to repairs, rent withholding, and repair and deduct). Rent-controlled tenants should be able to obtain a rent decrease from the local rent board to compensate for paying utilities directly. These Public Utilities Code protections apply to tenants in both multiunit and single-unit properties. SB 120 (Stats. 2009, ch. 560).

The statute provides:

Utility shutoffs to force a tenant out are illegal

California prohibits a landlord from cutting off any utility, changing the locks or otherwise locking the tenant out, removing doors or windows, or removing the tenant's belongings with the intent to terminate a tenancy. Civil Code § 789.3. Covered utilities include, but are not limited to, water, heat, light, electricity, gas, telephone, elevator, and refrigeration, whether or not the landlord directly controls them. See also Can my landlord evict me without going to court?

Frequently Asked Questions About the Sale of Rental Property and Eviction in California

Do Not Wait — Call Tenant Eviction Defense Now