Foreclosure: Right of First Refusal Following Trustee's Sale of One to Four Single Family Property

Foreclosure: Tenant's, prospective owner-occupants and non-profit's right of first refusal following trustee's sale of one to four single family property. No bundling of such properties at a trustee's sale.

First, this law grants tenants, prospective owner-occupants, nonprofit affordable housing providers, community land trusts, limited-equity housing cooperatives, and public entities a 45-day window to purchase residential property through foreclosure if they can match (in the case of tenants) or exceed (in the case of other purchasers) the last and highest bid made on residential one to four single-family homes at the foreclosure auction.  Second, this law prohibits sales of bundled properties at foreclusure auctions. Third, it increases local govenments' authority to assess fines on owners of blighted propeerties acquired at foreclosure sales.

C.A.R opposed this law as it creates a complicated and lengthy bidding and foreclosure sale process, causing uncertainty within the foreclosure transaction process.

This Law:

1) Forbids a foreclosure trustee from bundling properties for sale at a foreclosure auction, instead requiring that each property be bid on separately.

2) Provides an eligible bidder 45 days after a home foreclosure auction to make an offer for the home that exceeds the highest bid.  Defines "eligible bidder" to include: a) A tenant in the home, a prospective owner-occupant, or a nonprofit in which a propective owner-occupant or eligible tenant is a voting member or director. b) An eligible nonprofit based in California whose primary activity is developing and preserving affordable rental housing, a limited partnership for which an eligible nonprofit is the managing general partner; or a limited liability company in which eligible nonprofit corporation is the managing member. c) A community land trust or a limited-equity housing cooperative. d) The state, the University of California, a county, city, distruct, public authority, or public agency, and any other political subdivision or public corporation in the state.

3) Sunsets the provisions described above effective January 1, 2026.

4) Declares that nothing in the Civil Code provisions governing mortgage liens excempts the legal owner of property purchased at a foreclosure sale from complying with applicable laws regarding the eviction or displacement of tenants, including but not limited to, notice requirements, requirements for the provision of temporary or permanent relocation assistance, the right to return, and just cause eviction requirements.

5) It increases local governments' authority to assess fines on owners of blighted properties acquired at foreclosure sales, while also requiring local governments to provide these owners with more detail as to the alleged blight and giving owners more time to remedy issues before any fine is assessed against them.

Senate Bill 1079 is codified as Civil Code Sections 2929.3, 2924f, 2924g, 2924h, 2924n and 2924m.

Effective January 1, 2021.

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