Foreclosure Tenants and Their Utility Rights

Like most tenants whose landlords are in foreclosure or have foreclosed, my utilities were in jeopardy. My landlord had our water shut-off. Because of this, the electricity was also disconnected because the California law states that a property cannot have electricity if there is no water service. This left my family in a major bind.

I made the choice to call the police. The landlord was arrested because the foreclosure was not complete, meaning he was still responsible for providing us with water service. California law states that landlords are not allowed to disconnect utilities for any reason. whatsoever. In my case, I had been paying ALL of the utilities the entire time I'd been living in the property. So, he had no excuse. My landlord being arrested did not solve my problem. He just bailed out and disappeared.

I ended up having to call the Health Department to report the matter to them. At first, there was nothing they could do because the property was still in the landlord's name, and their was a very large balance due that I couldn't afford to pay. Once the foreclosure was complete, they were able to go after the real estate agent who was hired by the bank to manage the property. When he finally faxed the deed to the water department to show that the bank was now the owner, I was finally able to have the utilities put in my own name. This took about a month.

Since then, a new bill (AB 2586) has been passed in legislation to help tenants in this situation. The following is an excerpt from an article on the Realty Times website. The entire article can be found at: http://realtytimes.com/rtpages/20080828_protect.htm.

AB 2586 extensively addresses the matter of utilities. This is an issue in situations where the cost of one or more utilities has been included in the rent and payment of the utility bills has been the responsibility of the landlord. When a landlord loses a rental property in foreclosure he or she is likely to have let the utility bills go unpaid. Even if that is not the case, it is equally possible that the new owner won't be paying them. The potential result is that the tenant will have the utility service discontinued, often without ever having received a notice.

AB 2586 requires that in such a situation the utility must provide at least 15 days notice to the resident(s) that the service is scheduled to be terminated. The notice must be posted as well as mailed to "Any Person Renting Property At ____". It must contain a statement on the outside of the envelope in large print saying, "Utility service to this address may be cut off soon." The notice shall then inform the residents that they have the right to have the service put in their names, without being required to pay any delinquent amount that is currently due. The notice and the statement on the envelope must be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean (California's major spoken languages).