Is a purchaser of real property under a trustee’s deed required to perfect title before serving an eviction notice?
This article will discuss and analyze the results of a new California Supreme Court case regarding the procedures necessary before a new owner through foreclosure can evict the prior tenant.
A purchaser of real property that acquires title to property by trustee’s deed must perfect the title before serving a tenant a three-day written notice to quit. (Dr. Leevil, LLC v. Westlake Health Care Center (2018) 6 Cal.5th 474, 484-485. [“[A]n owner that acquires title to property under a power of sale contained in a deed of trust must perfect title before serving the three-day written notice to quit required by Code of Civil Procedure section 1161a(b).”].)
If the real property owner does not perfect title before serving the three-day notice, the notice is premature and void, and the unlawful detainer action based upon it will be improper. (Id. at 480.)
In Dr. Leevil, LLC, original real property owner (“Westlake Village”) entered into a commercial lease in 2002 with tenant/defendant (“Westlake Health”). (Id. at 477.) Six years later, Westlake Village obtained a bank loan and executed a deed of trust on the property. (Id.) Westlake Village defaulted on the loan, and the bank sold the promissory note secured by the deed of trust to Dr. Leevil, LLC (“Leevil”). (Id.) Leevil than instituted a nonjudicial foreclosure and bought the property at a trustee’s sale. (Id.) The next day, Leevil served a three-day written notice to quit upon tenant Westlake Health. (Id.) Five days later, Leevil recorded title to the property. (Id.) When Westlake Health did not vacate the property, Leevil initiated an unlawful detainer action 40 days after service of the written notice to quit. (Id.) Westlake Health argued that the unlawful detainer action is improper because the three-day notice to quit did not comply with Code of Civil Procedure section 1161a(b)(3).
Section 1161(a)(b) provides that “a person who holds over and continues in possession of…real property after a three-day written notice to quit the property has been served upon the person…may be removed therefrom as prescribed in this chapter: (3) Where the property has been sold in accordance with Section 2924 of the Civil Code, under a power of sale contained in a deed of trust executed by such person, or a person under whom such person claims, and the title under the sale has been duly perfected.” (Code of Civil Procedure section 1161a(b)(3).) Essentially section 1161a(b)(3) requires real property owners via non-judicial foreclosure trustee’s sales, and who seek to evict the holdover tenants on the acquired property, to first perfect their new title under the trustee sale before serving the tenant the three-day notice to quit the property. The court recognized “that the unlawful detainer statutes are to be strictly construed…” (Dr. Leevil, LLC, at 480.) As such, the court found that because Leevil served the three-day notice to quit before it perfected title, it did not strictly comply with 1161a(b) and therefore the three-day notice was premature and void, and the underlying unlawful detainer action improper. (Id.)
This case reaffirms the court’s determination to strictly comply unlawful detainer statutes. Specifically, in cases of eviction under 1161a(b)(3), new property owner’s who seek to evict the holdover must perfect their new title before serving any three-day notice. If not, the new property owner is at risk of having their unlawful detainer action dismissed.