Effective January 1, 2021, and amended January 1, 2022 (AB175), California Senate Bill 1079 (“SB 1079”), amends the foreclosure sale process to permit qualified parties a means to purchase property in foreclosure both at and after the foreclosure sale auction, subject to certain requirements. SB 1079 identifies the following categories of individuals and organizations authorized to participate in this process:
1. Prospective Owner-Occupant is a natural person who presents to the trustee an affidavit or declaration , pursuant to Section 2015.5 of Code of Civil Procedure, that:
(A) They will occupy the property as their primary residence within 60 days of the Trustee’s Deed being recorded.
(B) Will maintain their occupancy for at least 1 year.
(C) They are not any of the following:
(i) The mortgagor or Trustor.
(ii) The child, spouse or parent of the mortgagor or trustor.
(iii) The grantor of a living trust that was named in the title to the property when the notice of default was recorded.
(iv) An employee, officer, or member of the mortgagor or trustor.
(v) A person with an ownership interest in the mortgagor, unless the mortgagor is a publicly traded company.
(D) They are not acting as the agent of any other person or entity in purchasing the property.
2. Eligible Tenant Buyer is a natural person who at the time of the trustee’s sale:
(A) Is occupying the property as their primary residence;
(B) Is occupying the property under a rental or lease agreement entered into as the result of an arm’s length transaction with the mortgagor or trustor on a date prior to the recording of the Notice of Default against the property.
c. Is not the mortgagor or trustor, or the child, spouse or parent of the mortgagor or trustor
3. Eligible Bidder means any of the following:
(A) An eligible tenant buyer.
(B) A prospective owner-occupant.
(C) A nonprofit association, nonprofit corporation, or cooperative corporation in which an eligible tenant buyer or prospective owner- occupant is a voting member or director.
(D) An eligible nonprofit corporation based in California whose primary activity is the development and preservation of affordable rental housing.
(E) A limited partnership in which the managing general partner is an eligible nonprofit corporation based in California whose primary activity is the development and preservation of affordable housing.
(F) A limited liability company in which the managing member is an eligible nonprofit corporation based in California whose primary activity is the development and preservation of affordable rental housing.
(G) A community land trust, as defined in clause (ii) of subparagraph (C) of Paragraph (11) of subdivision (a) of Section 402.1 of the Revenue and Taxation Code;
(H) a limited-equity housing cooperative as defined in Section 817.
(I) The state, the Regents of the University of California, a county, city, district, public authority, or public agency, and any other political subdivision or public corporation in the state.
To establish that an individual or organization falls within one of the authorized categories, SB 1079 requires that the individual or organization submit a notarized affidavit or declaration executed under the penalty of perjury specifying how or why they meet the requirements to be deemed a Prospective Owner-Occupant, Eligible Tenant Buyer or Eligible Bidder together with their written notice of intent to bid or submission of their bid funds. While the requirements under each category vary, individuals or organizations interested in participating under SB 1079’s foreclosure sale and post- foreclosure sale bidding structure are encouraged to provide an affidavit or declaration that includes the following:
1.Name, address, phone number and contact information
2.A statement identifying how the individual or organization qualifies as a Prospective Owner-Occupant, Eligible Tenant Buyer or Eligible Bidder, including specifics on the parties current or future intended use of the property
3.Copies of any current lease agreement, if applicable
4.A statement identifying the party as a non-profit or other qualified agency, if applicable
5.Copies of certification or proof of non-profit - 501c3 or other qualified agency status, if applicable
6.A statement that the affidavit or declaration was executed under the penalty of perjury under the laws of the State of California
7.Signed Notary acknowledgement or jurat
In addition to meeting the statutory bidder qualifications and submitting a declaration supporting the same, SB 1079 contains a rigid framework outlining how to submit a bid, when, how and where bid funds must be received and the amount of the bid for a party to be deemed the successful purchaser either at or following the completed foreclosure auction. Due to SB 1079/AB175's intricate nature, parties are urged to contact a California licensed attorney to obtain guidance and legal advice regarding interpretation of the statute, qualification to bid, submission of the required declaration and bid and the bidding process. For further information regarding the bidding process, you may review the statutory requirements by visiting https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200SB1079 and
Effective 10/8/21 - NOTICE OF INTENTS/DECLARATIONS MUST BE SUBMITTED TO: CASB1079@TrusteeCorps.com
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