What are the pros and cons of renting a pre-foreclosure house?
When you say “pre-foreclosure” I assume you mean a home located in California that is in default on one or more loans and a “Notice of Default” has been recorded against it but no “Notice of Trustee’s Sale” has been recorded yet. If this is the case, from a Tenant’s perspective, you are taking substantial risk with regard to the Landlord’s (owner in default) ability to perform under the lease agreement. This risk is obviously mitigated by factors such a shorter term or a small security deposit. However, if you enter into a long-term lease, you will have to consider whether the landlord will be able to provide you with quiet enjoyment of the premises for the duration of the lease term given it is a distinct possibility that the home could be sold to a 3rd party purchaser at an eventual Trustee’s Sale or the home could be repossessed by the lending bank. A 3rd party purchaser of the home or a repossessing lender would not be bound by the terms of the Lease and would not need to honor the
