Effective January 1, 2021, amended January 1, 2022 (AB175), and amended January 1, 2023 (AB 1837) 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 (2924m of CA Civil Code):
.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, and who attaches evidence demonstrating the existence of the tenancy to the affidavit or declaration required pursuant to subparagraph (B) of paragraph (2) of subdivision (c).
(C) Is not the mortgagor or trustor, or the child, spouse or parent of the mortgagor or trustor.
(D) Is not acting as the agent of any other person or entity in purchasing the real property. Submission of a bid pursuant to paragraph (3) of subdivision (c) does not violate this subparagraph.
(E) Has not filed a petition under Chapter 7, 11, 12, or 13 of Title 11 of the United States Code at any time during the period from the date of the trustee’s sale of the property to the 45th day after the trustee’s sale, or the next business day following the 45th day if the 45th day is a weekend or holiday.
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 is a voting member or director.
D) An eligible nonprofit corporation with all of the following attributes:
(i) It has a determination letter from the Internal Revenue Service affirming its tax-exempt status pursuant to Section 501(c)(3) of the Internal Revenue Code and is not a private foundation as that term is defined in Section 509 of the Internal Revenue Code.
(ii) It has its principal place of business in California.
(iii) The primary residences of all board members are located in California.
(iv) One of its primary activities is the development and preservation of affordable rental or homeownership housing in California
(v) It is registered an din good standing with the Attorney General's Registry of Charitable Trusts, pursuant to the Supervision of Trustees and Fundraisers for Charitable Purposes Act (Article 7 (commencing with Section 12580) of Chapter 6 of Part 2 of Division 3 of Title 2 of the Government Code).
(E) A limited liability company wholly owned by one or more eligible nonprofit corporations as described in subparagraph (C) or (D)
(F) 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;
(G) a limited-equity housing cooperative as defined in Section 817.
(H) 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.
(4) “Evidence demonstrating the existence of the tenancy” means a copy of the dated and signed rental or lease agreement or, if a copy of the dated and signed rental or lease agreement is not available, then one of the following:
(A) Evidence of rent payments made for the property by the person asserting that they are an eligible tenant buyer for the six months prior to the recording of the notice of default.
(B) Copies of utility bills for the property payable by the person asserting that they are an eligible tenant buyer for the six months prior to the recording of the notice of default.
(b) Nothing in this section shall prevent an eligible tenant buyer who meets the conditions set forth in paragraph (1) of subdivision (a) from being deemed a prospective owner-occupant.
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 must provide an affidavit or declaration that includes the following:
(4)(c)(1) If a prospective owner-occupant is the last and highest bidder at the trustee’s sale, the date upon which the conditions set forth in Section 2924h for the sale to become final are met. The prospective owner-occupant shall submit to the trustee the affidavit or declaration described in paragraph (1) of subdivision (a) at the trustee’s sale or to the trustee by 5 p.m. on the next business day following the trustee’s sale.
(2) Fifteen days after the trustee’s sale unless at least one eligible tenant buyer or eligible bidder submits to the trustee either a bid pursuant to paragraph (3) or (4) or a nonbinding written notice of intent to place such a bid. The bid or written notice of intent to place a bid shall:
(A) Be sent to the trustee by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date.
(B) Be accompanied by an affidavit or declaration, pursuant to Section 2015.5 of the Code of Civil Procedure, identifying the category set forth in paragraph (3) of subdivision (a) to which the person or entity submitting the bid or nonbinding written notice of intent belongs and stating that the person meets the criteria for that category. If the winning bid is placed by an eligible bidder described in subparagraphs (C) to (G), inclusive, of paragraph (3) of subdivision (a), the affidavit or declaration shall affirm the bidder’s duty to comply with subdivision (a) of Section 2924o for the benefit of tenants occupying the property.
(C) Be received by the trustee no later than 5 p.m. on the 15th day after the trustee’s sale, or the next business day following the 15th day if the 15th day is a weekend or holiday.
(D) Contain a current telephone number and return mailing address for the person submitting the bid or nonbinding written notice of intent.
(3) (A) The date upon which a representative of all of the eligible tenant buyers submits to the trustee a bid in an amount equal to the full amount of the last and highest bid at the trustee’s sale, in the form of cash, a cashier’s check drawn on a state or national bank, a cashier’s check drawn by a state or federal credit union, or a cashier’s check drawn by a state or federal savings and loan association, savings association, or savings bank specified in Section 5102 of the Financial Code and authorized to do business in this state. This bid shall:
(i) Be sent to the trustee by certified mail, overnight delivery, or other method that allows for confirmation of the delivery date and shall
(ii) Be accompanied by an affidavit or declaration, pursuant to Section 2015.5 of the Code of Civil Procedure, stating that the persons represented meet the criteria set forth in paragraph (2) of subdivision (a), and that the persons represented are all of the eligible tenant buyers.
(6)(i) For trustee’s sales where the winning bidder is an eligible bidder under this section, the trustee or an authorized agent shall electronically send the following information to the office of the Attorney General within 15 days of the sale being deemed final:
(1) The dates when the trustee’s sale took place and when it was deemed final.
(2) The name of the winning bidder.
(3) The street address and assessor’s parcel number of the subject property.
(4) A copy of the trustee’s deed, as recorded, including the attached affidavit or declaration of the winning bidder.
(5) The category set forth in paragraph (3) of subdivision (a) to which the eligible bidder belongs.
(j) The Attorney General, a county counsel, a city attorney, or a district attorney may bring an action for specific performance or any other remedy at equity or at law to enforce this section.
PLEASE NOTE FOR NONPROFIT ASSOCIATION, NONPROFIT CORPORTION OR COOPERATIVE CORPORATION:
(a) On and after January 1, 2023, in the case of any real property purchased pursuant to Section 2924m by an eligible bidder described in subparagraphs (C) to (G), inclusive, of paragraph (3) of subdivision (a) of that section, the property shall be subject to a recorded covenant that ensures the property shall be sold at an affordable housing cost, as defined in Section 50052.5 of the Health and Safety Code, or rented at an affordable rent, as defined in Section 50053 of the Health and Safety Code, for lower income households for 30 years from the date the trustee’s deed is issued, or a greater period of time if any of the following apply (refer to code for more information).
In addition to meeting the statutory bidder qualifications and submitting a declaration supporting the same, SB 1079/AB175/AB1837 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:
Effective 10/8/21 - NOTICE OF INTENTS/DECLARATIONS MUST BE SUBMITTED TO: CASB1079@TrusteeCorps.com
If you are submitting a Notice of Intent as an Non-Profit Corporation, you MUST also attach a copy of Internal Revenue Service affirming its tax-exempt status pursuant to Section 501(c)(3) of the Internal Revenue Code.
© 2016 Trustee Corps. All Rights Reserved. | Privacy
CA SB1079 Inquiries:
17100 Gillette Ave.
Irvine, CA 92614