Last week in Nativi v. Deutsche Bank, the California Court of Appeal applied the federal Protecting Tenants Against Foreclosure Act of 2009 (PTFA) to revive two renters' state-law claims against the bank that bought the property they were renting.
Rosario Nativi and her son Jose Perez had been living in their home in Sunnyvale, California, for several years under a series of rental agreements, when ownership changed hands because of a foreclosure. Deutsche Bank, the new owner, evicted Rosario and Jose, threw their belongings into the backyard and destroyed them, and refused to let them back into their home (enlisting the police to help keep Rosario and Jose out). Rosario and Jose sued, asserting (among other things) wrongful eviction and related state-law torts. The trial court granted summary judgment to the bank, concluding that the foreclosure sale extinguished the lease with the prior owner, and with it, the rights of Rosario and Jose as tenants.
In last week's decision, the appellate court reversed, holding that the PTFA "causes a bona fide lease for a term to survive foreclosure through the end of the lease term subject to the limited authority of the immediate successor in interest to terminate the lease, with proper notice, upon sale to a purchaser who intends to occupy the unit as a primary residence." As a result, when a bank acquires a property through foreclosure, it does so subject to the terms of the tenants' lease from the prior owner.