BRE DDR BR Whittwood CA LLC v. Farmers & Merchants Bank of Long Beach

If a tenant’s leasehold interest is foreclosed upon, the purchaser at the foreclosure sale succeeds, as assignee, to the tenant’s right to occupy the premises and to all covenants of the lease that run with the land, but not to the lease contract itself absent express assumption.  Upon foreclosure of a deed of trust on a tenant’s leasehold interest, the purchaser at the foreclosure sale succeeds, as assignee, to the tenant’s right to occupy the premises and to all covenants of the lease that run with the land, but absent the purchaser’s express assumption of the lease, the purchaser is not bound by the lease as a contract and so has no continuing liability under the lease if it surrenders the premises to the landlord with the intention of terminating the lease.  An express assumption requires specific affirmation by the purchaser to bind itself to the lease obligations.  This is true even though the lease said that any person taking by foreclosure of a deed of trust in the leasehold estate would assume the lease—as the purchaser did not sign the lease and so is not, absent separate consent, bound by its terms.

California Court of Appeal, Second District, Division 5 (Kriegler, Acting P.J.); August 29, 2017; 2017 WL 3712198

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