Security Deposits after Foreclosure (California) | Steve Beede

Security Deposits after Foreclosure (California) | Steve Beede: Under California Civil Code Section 1950.5, a successor owner is jointly liable with the former owner to retun the deposits once the tenant vacates. The idea is that the innocent tenant’s right to the deposit should be protected and that any disputes over this are between the current and prior owner, not then tenant. There is an ambiguity being argued by lenders that this obligation is extinguished by the foreclosure just as is the rental agreement itself. This may be held to be true where the post-foreclosure owner treats the rental agreement as extinguished. In that case, the tenant similarly has no obligation to pay the rent and so the situation may become a wash. But the result is reasonably different where the new owner treats the rental agreement as continuing and actually collects rent. There, most likely, the law will protect the tenant.