I recently learned about a new decision in the Court of Appeal here in California that could have some relatively major impacts on property management in San Jose. The decision itself grants tenants who had signed a legal lease the right to stay on the premises until the end of the lease, even if the property owner defaults on their mortgage loan and the property itself is repossessed. This represents a rather dramatic change from the way things used to be, as previously foreclosure was considered to have ended any leases associated with the property.
So what are the implications for property management in San Jose? There are several, but here are several of the most important:
Foreclosure/Repossession May Not Be Economical
For some lenders, repossession or foreclosure may simply not be financially feasible under the new law, particularly if a property has multiple tenants with differing lease structures. This may cause banks to hire property management in San Jose to administer properties where they would immediately liquidate and sell them under the old laws.
New Potential Legal Liability
There is a new potential legal liability for banks to be afraid of as well; the court decision explicitly granted tenants the ability to sue the bank if they are displaced or evicted after foreclosure. This almost guarantees that property owners will turn to property management in San Jose rather than risk opening themselves up to lawsuits from tenants under this new legal provision.
Greater Focus on Screening Prior to Signing
Last but not least, property owners will likely step up their efforts to screen potential tenants prior to signing any form of lease with them, particularly if their own finances are somewhat shaky. Property management in San Jose simply won’t rent to people who could be considered a risk to the viability of the whole rental property at large.
Will this new law hold up? Only time will tell, but it will certainly result in a variety of interesting legal situations and court battles as property owners, mortgage holders, and tenants all collide in a free-for-all. Firms engaged in property management in San Jose will likely benefit from the law at least in the short term, as more property owners will be willing to come to accommodations with tenants who are behind in rent, rather than risking a drawn out legal battle.