Question for California Landlords

I have a friend in California who recently rented a house in Carlsbad, California. Well he got an email from the landlord yesterday afternoon letting him know that she was not able to afford the payments anymore (payment is $1500 per month higher than rent) and was going to put the house on the market. She wants him to show the house for her and she will give him a break on the rent of $500 per month until it sells at which point he would agree to move out before closing. Well he emailed her back and asked if her if he could just move out on September 1st because he does not want to be stuck without a place to live if it sells quickly. She said that would be fine but unfortunately due to her money troubles she does not have his $3500 deposit anymore, but that she would “pay him back someday and she was really sorry”. My question is does he have any recourse other than not paying his last months rent? Has she broken any laws by spending the money? Any advice would be very much appreciated. Thank you.

The SD isn’t her personal property and she must account for it properly.

Your friend has several options. He can bar entry to the home to prospective buyers. Keep in mind CA law requires access to potential purchasers, but the owner will need a court order to force the issue. CA law requires 24 hours notice for entry and he can legally refuse access without proper notice. He can refuse to show the unit and force someone else to do it. He can stay in the unit until the sheriff shows up. I don’t know if this possible in CA, but he may be able to lien the property for the security deposit. She can’t sell until the lien is paid.

He’d better NOT refuse to allow showing of the house. The law says the owner has the legal right to sell it and to show it to sell it. I’ve never heard of a landlord doing it, but she could sue him for restraint of trade if he interfers with the sale of the house. If she is broke and he has money, she might do that.

The landlord might agree to allow him to live out the deposit. I certainly wouldn’t, but she might, so it is worth asking.

His best option is to get it in writting that he has permission to break the lease, then when he doesn’t get his deposit back, take all his paperwork, and her note that she doesn’t have his deposit money, and go to small claims court, get a judgement against her, and place a lien on the house.

That way, he will get paid when the house sells.

If the landlord is going under financially, he gains nothing by interferring with the sale of the house. The only thing he accomplishes is the risk of destroying his own credit rating.

It’s also very possible that the landlord will agree to sign a promissary note for the deposit, to be paid out of the proceeds for the house.

A little negotiation could result in a win-win for everybody-- or at least the best that can be worked out in a difficult situation.

He is not wanting to make things difficult for the owner when she sells the house. She is a very sweet single mother who is losing this rental as well as her primary residence to foreclosure. He is just worried about losing his security deposit. $3500 is a lot of money especially in California.

On a different note I know of two properties that may be available for a short sale if anyone is interested.

It would make sense to have her agree that he stay there and not pay rent in exchange for his deposit. This is the only thing that makes sense, because she is probably going to be broke after all this is over, so he will probably never see his money. Not because she does not want to pay him, but because she just does not have the money. GET IT IN WRITING - because her loan docs prob. say that the lender can collect rents - still, it will take them awhile to get around to doing this.