GUEST EDITORIAL
In addition to the changes AB 3088 placed on lenders as of September 1, 2020, we will now have to become familiar with a new process for trustee sales conducted on residential 1-4 properties after January 1, 2021. The goal of our legislature was to prevent large companies from buying numerous homes in neighborhoods and turning them into rentals. The Bill is their attempt to encourage home ownership, but sadly creates more issues than solutions.
Part I of SB 1079
Section 2924m is added to the California Civil Code, which defines two new groups of eligible bidders:
1. Prospective Owner Occupant:
Must be a natural person
Will occupy the property within 60 days of the Trustee’s Deed recording
Will maintain occupancy for 1 year
Cannot be the trustor, or child, spouse or parent of trustor
A nonprofit association or similar entity who assists with affordable housing
2. Tenant Buyer:
Must be a natural person
Occupying subject property as their primary residence with a rental or lease agreement
Arm’s length transaction
Agreement is dated prior to the NOD recording date
Is not the trustor, or child, spouse or parent of trustor
How will this affect the trustee sale process?
Sales may not be final on the day of sale
Eligible bidder can submit a bid or nonbinding written notice of intent to trustee within 15 days after the trustee sale
Tenant bidder must match the highest bid
Prospective owner occupant must bid more than the highest bid
Funds must be delivered to trustee within 45 days of the sale
Trustee must issue or record Trustee’s Deed within 48 days of sale
Trustee must add the following paragraph to the Notice of Sale:
NOTICE TO TENANT: You may have a right to purchase this property after the trustee auction pursuant to Section 2924m of the California Civil Code. If you are an “eligible tenant buyer,” you can purchase the property if you match the last and highest bid placed at the trustee auction. If you are an “eligible bidder,” you may be able to purchase the property if you exceed the last and highest bid placed at the trustee auction. There are three steps to exercising this right of purchase. First, 48 hours after the date of the trustee sale, you can call [ ] or visit this internet website www.[ ], using the file number assigned to this case [case file number] to find the date on which the trustee’s sale was held, the amount of the last and highest bid, and the address of the trustee. Second, you must send a written notice of intent to place a bid so that the trustee receives it no more than 15 days after the trustee’s sale. Third, you must submit a bid so that the trustee receives it no more than 45 days after the trustee’s sale. If you think you may qualify as an “eligible tenant buyer” or “eligible bidder,” you should consider contacting an attorney or appropriate real estate professional immediately for advice regarding this potential right to purchase.
Trustee will be required to post certain information on their sale website within 48 hours after the sale. Here are a few of the possible scenarios we foresee:
- Eligible bidder attends sale, places last & highest bid & provides affidavit, sale is Final
- Eligible bidder submits bid or nonbinding notice of intent to trustee with 15 days of sale
- Eligible bidder submits timely nonbinding notice of intent but fails to provide the funds within 45 days
- Trustee receives bids for the same amount
- No bid or notice of intent received within 15 days, property sells to 3rd party or reverts to lender
Needless to say, this new process will provide many challenges for trustee’s, lenders and bidders many of which may have to be resolved by a court of law.
Part II of SB 1079
LENDER/OWNER MUST MAINTAIN VACANT PROPERTIES
Many cities and local jurisdictions instituted registration requirements for properties in foreclosure. Failure to abide subjected lenders and trustees to fines and penalties. Now the requirement to maintain residential properties is Statewide.
• Vacant residential property
• Government entity may impose fine for violation(s)
• Notice must be provided to remedy before fine imposed
• Up to a maximum of $2,000/day for first 30 days
• Up to a maximum of $5,000/day thereafter
We have tried to provide a very simplified explanation of SB 1079, but there are many areas lacking clarity and direction for trustees and lenders. This information is not intended to be legal advice and we encourage you to contact your legal counsel with questions.
11707 Fair Oaks Blvd, Suite 202, Fair Oaks CA 95628 (916) 962-3453;
support@mtglenderservices.com
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