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What Do I Do With This Stuff? Dealing With Abandoned Property After Foreclosure

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Former Senior Attorney
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By: Lyndsey Torp

You’ve successfully foreclosed on a commercial building in California, and, thankfully, the borrower moved out after foreclosure or after a period of tenancy. But the borrower left behind all sorts of property – furniture, filing cabinets, records, and other assorted property.  While you may be tempted to just toss it all in the dumpster, doing so may subject you to liability.  There are several statutes that you should consider when determining how to handle the abandoned property.

Statutory Options for a Landlord

A landlord-tenant relationship may arise following foreclosure if, for example, the owner of the property accepts rent from the former owner. If the tenant subsequently turns over possession of the commercial property but leaves personal property at the premises,[1] California Civil Code provides a landlord with statutory options to deal with “lost” (Cal. Civ. Code § 2080) or “abandoned” property (Cal. Civ. Code §1993).

Although detailed and sometimes cumbersome, following the statutory procedures protects landlords from potential liability for an improper “conversion.” Conversely, resorting to other “self-help” remedies to retain or dispose of property not removed by vacating tenants exposes landlords to liability.[2]

The “lost” and “abandoned” property statutes require the landlord to take various steps based on its “reasonable belief” about the identity of the lawful property owner (or owners). “Reasonable belief” in this context has a uniform definition:

“Reasonable belief” means the actual knowledge or belief a prudent person would have without making an investigation, including any investigation of public records, except that, if the landlord has specific information indicating that an investigation would more probably than not reveal pertinent information and the cost of an investigation would be reasonable in relation to the probable value of the property involved, “reasonable belief” includes the actual knowledge or belief a prudent person would have if an investigation were made.[3]

Lost Property

To be shielded from personal liability to the property owner for unauthorized “conversion” or other damages, a landlord who “reasonably believes” that property left behind is lost must dispose of it pursuant to California Civil Code section 2080 et seq.[4]  While the statute does not provide a definition of lost property, “lost property” has been defined as property where the legal owner is unknown.[5]

Lost property, under the “reasonable belief” standard above, that is valued at $100 or more must be turned over to the police or sheriff’s department for the city or county where the premises are located, under affidavit by the landlord describing the property and stating where it was found.[6]  The law enforcement agency is then obligated to use reasonable efforts to find the owner; and if the property is not claimed by the owner within specified time periods, it will be sold at public auction for the benefit of the city or county.[7]

If the appropriate police or sheriff’s department refuses to accept the lost-property turnover, the property is deemed not “lost” and the landlord may follow the procedures for disposition of apparently “abandoned” property (described below).[8]

Abandoned Property

To dispose of apparently abandoned personal property and to avoid risk of liability to the personal property owner, a landlord on a commercial property should follow the procedures set forth in California Civil Code section 1993 et seq.


Former tenants and others “reasonably believed” to be owners of the apparently abandoned property must be given proper written notice of the right to reclaim the abandoned property.[9]  The tenant is presumed to be the owner of any “records” remaining on the property.[10]

The notice to be provided to former tenants must be in “substantially” the form as the sample notice set forth in California Civil Code section 1993.04(a). The notice must also contain one of the following statements:

(1) If you fail to reclaim the property, it will be sold at a public sale after notice of the sale has been given by publication. You have the right to bid on the property at this sale. After the property is sold and the cost of storage, advertising, and sale is deducted, the remaining money will be paid over to the county. You may claim the remaining money at any time within one year after the county receives the money.

(2) Because you were a commercial tenant and this property is believed to be worth less than the lesser of seven hundred fifty dollars ($750), or one dollar ($1) per square foot of the premises you occupied, it may be kept, sold, or destroyed without further notice if you fail to reclaim it within the time indicated above.[11]

This notice must be served either by personal delivery to the former tenant and nontenant supposed property owners; or by first-class, postage prepaid mail addressed as follows: (a) to the former tenants’ and other supposed owners’ last known address; and (b) if there is “reason to believe” that notice sent to the last known address will not be received by the person entitled to notice, also to such other address known to the landlord where that person may reasonably be expected to receive the notice (e.g., tenant’s attorney, if any); and (c) to the premises vacated by the former tenant.[12]

The former tenant or other owner must take possession no later than 15 days after personal delivery of the notice to the respective claimant or, if the notice was mailed, 18 days after it was deposited in the mail.[13]

               Release of Property to Former Tenant or Nontenant Owner

Regardless of whether the landlord follows the procedures set forth in Civil Code section 1993 et seq. (as described above), the landlord may release to the former tenant any and all property left on the premises after termination of the tenancy; i.e., the landlord is not bound to determine who the lawful owner is and is not exposed to conversion or other liability to adverse claimants.[14]

In addition, there is no liability exposure for releasing the property to a claimant owner who is not the former tenant, provided: (1) the landlord “reasonably believed” the claimant to be the lawful owner; (2) the adverse claimants alleging that the property was wrongfully released were given notice as required by Civil Code section 1993.03 (notice of right to reclaim abandoned property to be given to former tenants and to all others whom landlord reasonably believes to be owners of the property); and (3) if the adverse claimants were not given the section 1993.03 notice, they cannot prove that, prior to releasing the property, the landlord believed or reasonably should have believed that they had an interest in the property and also that the landlord knew their address or should have known their address upon a reasonable investigation.[15]

               Property Valued at Under $750 or $1 Per Square Foot

Where the property is not released to a former tenant and the total resale value of the property is less than the lesser of either $750 or $1 per square foot of the premises occupied by the former tenant, the landlord may retain the property for his or her own use or dispose of it in any manner.[16]

               Property Valued at Over $750 or $1 Per Square Foot

Where the property is not released to a former tenant and the total resale value of the property is greater than the lesser of either $750 or $1 per square foot of the premises occupied by the former tenant, the property must be sold at public sale by competitive bidding.[17]

Notice of the time and place of the public sale shall be given by publication pursuant to section 6066 of the California Government Code – once a week for two successive weeks, in a newspaper that publishes once a week or more often, with at least five days between publication dates, and the period of notice commences on the first day of publication and terminates at the end of the fourteenth day – in a newspaper of general circulation published in the county where the sale is to be held.[18]  The last publication shall be not less than five days before the sale is to be held.  Cal. Civ. Code § 1993.07(b)(2).  The notice of the sale shall not be published before the date that the former tenant could reclaim the property.[19]

The notice of the sale shall describe the property to be sold in a manner reasonably adequate to permit the owner of the property to identify it.[20]  The notice may describe all or a portion of the property, but the limitation of liability does not protect the landlord from any liability arising from the disposition of property not described in the notice, with the exception of locked containers that deter immediate access to the contents.[21]

After deduction of the costs of storage, advertising, and sale, any balance of the proceeds of the sale that is not claimed by the former tenant or an owner other than the tenant shall be paid into the treasury of the county in which the sale took place not later than 30 days after the date of sale.[22]  The former tenant or other owner may claim the balance within one year from the date of payment to the county by making application to the county treasurer or other official designated by the county.[23]  If the county pays the balance or any part thereof to a claimant, neither the county nor any officer or employee thereof shall be liable to any other claimant as to the amount paid.[24]

The landlord or tenant is not precluded from bidding on the property at the public sale.[25]

Safe Harbor in the Information Practices Act

To the extent that there is no landlord-tenant relationship at the foreclosed property, the statutory procedures and protections set forth above likely do not apply. But there are numerous state and federal statutes that govern retention and disposal of records (e.g., the Medi-Cal Act, the EMS Fund, the Knox-Keene Act, OSHA, the California Financial Information Privacy Act).  The specific requirements of those and any other applicable statutes and regulations should be carefully considered in evaluating how to handle abandoned records.  But to the extent that such regulations do not apply to subsequent property owners, the California Information Practices Act of 1977 (the “Information Practices Act”) includes specific immunity for any business that properly disposes of abandoned records.[26]

The Information Practices Act first provides certain requirements for retention and disposal of personal information, and notes that the intent of the Legislature was to protect the personal information (including medical and financial information (Cal. Civ. Code § 1798.80(e))) of California residents.[27]  “Personal information” is defined as “any information that identifies, relates to, describes, or is capable of being associated with, a particular individual, including but not limited to…financial information, medical information, or health insurance information.”[28]

In addition, the Information Practices Act requires that a “business that owns, licenses, or maintains personal information about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.”[29]

Notwithstanding the above, the Information Practices Act also includes a specific immunity for disposal of abandoned records, if certain procedures are followed.[30]  Specifically, the Information Practices Act provides that “[t]he Legislature finds and declares that when records containing personal information are abandoned by a business, they often end up in the possession of a storage company or commercial landlord. It is the intent of the Legislature in paragraph (1) to create a safe harbor for such a record custodian who properly disposes of the records in accordance with paragraph (1).”[31]

The method for proper disposal of records is set forth in California Civil Code section 1798.84(f)(1), which provides: “A cause of action shall not lie against a business for disposing of abandoned records containing personal information by shredding, erasing, or otherwise modifying the personal information in the records to make it unreadable or  undecipherable through any means.”  “Records” are defined as “any material, regardless of the physical form, on which information is recorded or preserved by any means, including in written or spoken words, graphically depicted, printed, or electromagnetically transmitted.”[32]


While sometimes cumbersome, following the applicable procedures will help ensure that a new owner by foreclosure obtains the protections of these statutes – avoiding liability for improper handling of abandoned property.

[1] Similar procedures exist where the landlord recovers possession following an unlawful detainer action. See Cal. Code Civ. Proc. § 1174(e)-(m).

[2] Cal. Civ. Code § 1993.02(f).

[3] Cal. Civ. Code §§ 1980(d) and 1993(e); Cal. Code Civ. Proc. § 1174(m).

[4] Cal. Civ. Code § 1982(a); Cal. Code Civ. Proc. § 1174(e).

[5] Friedman, California Practice Guide: Landlord-Tenant, § 9:576.

[6] Cal. Civ. Code §§ 2080–2080.10.

[7] Id.

[8] Cal. Civ. Code § 1982(b); Cal. Code Civ. Proc. § 1174(e).

[9] Cal. Civ. Code § 1993.03(a).

[10] Cal. Civ. Code § 1993.03(a).

[11] Cal. Civ. Code § 1993.04(b).

[12] Cal. Civ. Code § 1993.03(c).

[13] Cal. Civ. Code § 1993.03(b).

[14] Cal. Civ. Code § 1993.08(a) (“if the landlord releases to the former tenant property that remains on the premises after a tenancy is terminated, the landlord shall not be liable with respect to that property to any person”); Friedman, California Practice Guide: Landlord-Tenant, § 9:622.

[15] Cal. Civ. Code. § 1993.08(b)(1)-(2).

[16] Cal. Civ. Code § 1993.07(a).

[17] Cal. Civ. Code § 1993.07(a).

[18] Cal. Civ. Code § 1993.07(b)(1).

[19] Cal. Civ. Code § 1993.07(b)(3).

[20] Cal. Civ. Code § 1993.07(b)(4).

[21] Cal. Civ. Code § 1993.07(b)(5).

[22] Cal. Civ. Code § 1993.07(c)(1).

[23] Cal. Civ. Code § 1993.07(c)(2).

[24] Cal. Civ. Code § 1993.07(c)(3).

[25] Cal. Civ. Code § 1993.07(d).

[26] Cal. Civ. Code § 1798.84(f).

[27] Cal. Civ. Code § 1798.81.5(a)(1).

[28] Cal. Civ. Code § 1798.80(e).

[29] Cal. Civ. Code § 1798.81.5(b).

[30] Cal. Civ. Code § 1798.84(f).

[31] Cal. Civ. Code § 1798.84(f)(2).

[32] Cal. Civ. Code § 1798.80(b).