Real Estate Law
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Potentially the tenant can sue the landlord for fraud for failure to disclose that the property is in foreclosure at imminent risk of being foreclosed. This is considered the failure to disclose a material fact.
You are correct that there are many protections for renters under state and federal law if the property forecloses.
Where in California is the property located?
Orange County. My understanding is that it is legal to rent a property in CA under these circumstances. Am I incorrect? How can the tenant sue me for renting a property that is mine? What exactly can they sue me for?
I am exploring my options at this point so I wouldn't classify it as being in imminent risk of foreclosure.
I agree with you. I used the work potentially. The only time there is the”potential" for suit is when the property is in foreclosure or in imminent risk of foreclosure. When this is the case the tenant would be able to sue under disclosure laws for failure to disclose a material fact affecting the property. This would not be the case if nothing has been filed and you are not at risk when you enter into the agreement. There is nothing in Orange County prohibiting you from renting the property or placing a listing in the MLS.