AB 2170 Changes California Law on Foreclosure Sales

By Eric S. Pezold and Andrew B. Still

California changed its law at the beginning of the 2023 to require that certain sellers of foreclosed properties containing one to four residential units only accept offers from eligible bidders during the first 30 days after a property is listed. Cal. Civ. Code § 2924p. The bill, AB 2170, codified in the California Civil Code at § 2924p, only applies to entities that annually foreclose on 175 or more residential real properties in California. Section 2924p requires the entity, during the first 30 days after a property is listed, to only accept offers from eligible bidders and to respond, in writing, to all offers received from eligible bidders before considering any other offers. Id. Eligible bidders include prospective owner-occupants, certain nonprofit affordable housing corporations, California-based community land trusts and limited-equity housing cooperatives, and certain governmental agencies. Id. The law also requires eligible bidders to submit an affidavit, or declaration, with their offer to the selling entity. Id. Entities must sell the properties coming out of foreclosure individually, not in “bundles” (two or more parcels of real property with one to four residential units at least two of which have been acquired through foreclosure). Id.

The legislature’s intent with § 2924p is to allow for eligible bidders to get a “first look” and have an early opportunity to purchase properties that have been acquired through the foreclosure process. The goals of § 2924p are to: (1) expand home ownership opportunities; (2) strengthen neighborhoods and communities; and (3) require sellers to respond to offers received during the first look period before accepting or considering investor offers to purchase single-family homes. Id.