Mortgages: foreclosure

The law gives qualifying tenants, nonprofits, cooperatives, community land trusts, and public entities more opportunity to buy small residential properties after foreclosure and preserve them as housing. It also adds enforcement tools against ineligible bidders.

What the law does ​

• Applies the delayed-finality and post-sale bidding process to eligible one-to-four-unit residential properties, with distinct eligibility rules for tenant and community bidders.
• Replaces the former eligible tenant buyer term with eligible tenant bidder and removes prospective owner-occupants from eligible bidders.
• Lets eligible tenant bidders match the auction's highest bid, while eligible tenant and community bidders may submit a higher bid within the statutory process.
• Requires qualifying nonprofit bidders to meet an additional state-law requirement, alongside existing California presence, affordable-housing mission, and charity-registration standards.
• Allows the Attorney General, county counsel, city attorneys, and district attorneys to seek specific performance, other remedies, and a civil penalty equal to one-third of a property's fair market value when an ineligible person or entity submits a bid.
• Requires trustees to report finalized sales won by eligible bidders to the Department of Justice, which must publish searchable summary information online.
• Updates the Foreclosure Intervention Housing Preservation Program and social-housing definitions to align with the revised bidder categories.

Who it affects ​

• Tenants occupying qualifying foreclosed properties who seek to buy their homes.
• Affordable-housing nonprofits, tenant-linked organizations, community land trusts, limited-equity cooperatives, and public entities.
• Foreclosure trustees, lenders, and other auction bidders.