Residential real property: foreclosure.

Existing law prescribes various requirements to be satisfied before the exercise of a power of sale under a mortgage or deed of trust and prescribes a procedure for the exercise of that power. Existing law authorizes a trustee, or their agent or successor in interest, upon the sale of property pursuant to a power of sale, to demand and receive from a beneficiary, or their agent or successor in interest, or deduct from the proceeds of the sale, specified reasonable costs and expenses that are actually incurred in enforcing the terms of the obligation and trustee's or attorney's fees. Existing law, until January 1, 2026, requires a specified notice to tenants and prescribes a process in connection with a trustee's sale of property under a power of sale contained in a deed of trust or mortgage on real property containing 1 to 4 residential units, inclusive. Under existing law, if a prospective owner-occupant, as defined, is the last highest bidder, the date upon which specified conditions required of the bidder at the trustee sale to become final are met. Existing law requires the trustee to require the prospective owner-occupant to provide certain information confirming the owner-occupant's status. Existing law, until January 1, 2026, grants eligible tenant buyers, as defined, and other eligible bidders, as defined, certain rights and priorities to make bids on the property after the initial trustee sale, and potentially to purchase it as the last and highest bidder, subject to certain requirements and timelines, if a prospective owner-occupant is not the last highest bidder. Existing law requires prospective owner-occupants, eligible tenant buyers, and other eligible bidders to submit affidavits or declarations under penalty of perjury in connection with this process. Existing law, until January 1, 2026, for purposes of the exercise of a power of sale as described above, prohibits a trustee from bundling properties for the purpose of sale, instead requiring each property to be bid on separately, unless the deed of trust or mortgage provides otherwise. This bill would revise the process described above and extend its operation and the operation of the related provisions described above until January 1, 2031, and make conforming changes. The bill would revise the definition of an eligible tenant buyer to, among other things, also describe natural people who are occupying property under a rental or lease agreement with a mortgagor's or trustor's predecessor in interest. The bill would also revise the requirements for an eligible nonprofit corporation and limited liability company to meet the definition of eligible bidder. The bill would expand affidavit and declaration requirements for eligible bidders if they are winning bidders to address new requirements that the bill would impose regarding the use of properties as affordable housing and the treatment of tenants following purchase. By extending the operation of the provisions described above, and by expanding the requirements for affidavits and declarations provided under penalty of perjury, the bill would expand the definition of a crime, thus imposing a state-mandated local program. This bill would authorize a trustee to deduct fees of $200 or 16 of 1% of the unpaid principal sum secured, whichever is greater, for providing services from the proceeds of the sale if an eligible tenant buyer or eligible bidder submits to the trustee either a bid or a nonbinding written notice of intent to place a bid. The bill would revise the dates when a trustee is to receive specified documents to account for weekends and holidays and would prohibit a trustee, on the last day that bids are eligible to be received, from receiving any bid that is not sent by certified mail or overnight mail. This bill would require a trustee or its authorized agent to send specified information to the Attorney General if the winning bidder at a trustee sale to which this process applies is an eligible bidder, as defined. The bill would authorize the Attorney General, a county counsel, a city attorney, or a district attorney to bring an action to enforce these provisions. The bill would specify that the pendency of a determination of finality under the process described above is prohibited from causing termination of any hazard insurance coverage in effect at the time of the trustee's sale. The bill would require specified successful eligible bidders at foreclosure sales subject to this process to subject properties to a recorded covenant that requires the property be sold at an affordable housing cost or rented at an affordable rent for lower income households, as those terms are defined, for 30 years, or a greater period of time, as specified. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.