Effective January 1, 2025, a new law (AB 2424) amends existing California foreclosure laws (Civil Code Sections 2923.5, 2923.55, and 2924f) and adds a new Section 2932.2 to enhance consumer protections during the non-judicial foreclosure process.
The new law applies to residential properties with no more than four dwelling units regardless of occupancy by either owner or tenants.
Key Provisions
- Third-Party Notification:
The bill mandates that mortgagees, beneficiaries, or their agents allow third parties—such as family members, HUD-certified housing counselors, or attorneys—to record a request to receive copies of notices of default and notices of sale. This must be facilitated at specified points in the loan and foreclosure process.
- Postponement of Foreclosure Sales:
If a trustee receives a listing agreement for the property’s sale from the mortgagor or trustor (via certified mail or tracked courier) at least five business days before the scheduled sale date, the foreclosure sale must be postponed by an additional 45 days. The listing must be with a California-licensed real estate broker and placed on a public marketing platform.
If a purchase agreement is subsequently received at least five business days before a postponed sale date, the trustee must further delay the sale by at least 45 days from the receipt date.
- Minimum Bid Requirement at Initial Trustee Sale:
The mortgagee, beneficiary, or authorized agent must provide the trustee with the property’s fair market value (FMV) at least 10 days before the initially scheduled sale date. FMV is defined based on appraisals or comparable sales data.
The trustee is prohibited from selling the property at the initial trustee’s sale for less than 67% of this FMV.
If the property remains unsold after the initial sale, the trustee must postpone the sale for at least 7 days, after which it can be sold to the highest bidder without the 67% FMV restriction.
Disclaimer: This synopsis of AB2424 is intended for informational purpose only and shall not be construed as legal advice. LFS is not qualified to dispense legal advice. Please consult an attorney for any legal matters.