Effective immediately, an REO lender or buyer who acquires title through a foreclosure sale must give at least a 90-day notice to terminate a tenant as defined. A 90-day notice to terminate is sufficient for a month-to-month tenant or if a new owner will occupy the property as a primary residence at the end of the 90 days. Otherwise, a tenant with a one year or other fixed-term lease with a remaining lease term exceeding 90 days can stay in the premises until the remaining lease term ends. This new 90-day notice requirement applies to foreclosures of a federally-related mortgage loan or residential real property, except for properties under rent control, rent-subsidized programs (such as Section 8), or other state laws that provide additional protections for tenants. This law expires on December 31, 2012.
Speaking of state laws, there is a bill pending in Sacramento about this very situation.
AB 603 (Price) Statewide "Just Cause" for REO Property - This bill would prohibit anyone who acquires foreclosed rental property from terminating a tenancy unless the new owner has owned the property for a minimum of one year or can demonstrate a "just cause" (e.g., non-payment of rent, etc.) for the eviction. AB 603 would apply to ANY property that is being leased by a tenant prior to the completion of the foreclosure proceedings, and includes single-family detached homes, condominiums, cooperatives, duplexes, apartments and townhomes. The provisions in AB 603 would sunset January 1, 2013. The California Association of Realtors opposes this bill because it will create a disincentive for ANY buyer to purchase an REO home, and will only serve to further delay the recovery of California's housing market.
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