Foreclosure  ·  September 27, 2026

California Foreclosure Auctions Change on January 1, 2027

For five years the gavel at a California trustee's sale has not been the end of the story. A buyer who won the auction on Tuesday could find, forty-five days later, that a tenant had matched the price, or that an owner-occupant or a nonprofit had topped it, and taken the property. On January 1, 2027 the class of people who can use that window narrows considerably, and one category of bidder disappears from it altogether.

The vehicle is AB 1957 (Pacheco), Chapter 279, Statutes of 2026, chaptered September 18, 2026. It amends Civil Code sections 2924d, 2924f, 2924h and 2924m, and makes conforming changes to Health and Safety Code sections 50612 and 50720.2. It is not an urgency statute, so it operates January 1, 2027.

Two things to clear away before anything else, in case you have seen either of them.

AB 1957 does not repeal the post-sale bidding framework. An earlier amended version of the bill would have repealed Civil Code section 2924m outright and pulled the sunset dates forward from 2031 to 2027. That version is not law. The chaptered bill amends section 2924m rather than repealing it, does not touch section 2924g at all, and leaves every sunset where it already was.

AB 1957 did not change a single sunset date. Sections 2924f, 2924h and 2924m each still close with the sentence that the section "shall remain in effect only until January 1, 2031, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2031, deletes or extends that date." Section 2924d carries the same January 1, 2031 repeal date in shorter form. AB 1837 (Stats. 2022, ch. 642) set that date in all four sections; later enactments, including SB 1146 (Stats. 2024, ch. 601), re-enacted some of them without disturbing it. Either way, AB 1957 moved nothing. The chaptered text retains January 1, 2031 in all four sections; a 2027 date appears in an earlier version of the bill.

This article is for owners facing a trustee's sale, investors who bid at one, and the brokers and property managers who advise them. Our overview of judicial versus non-judicial foreclosure covers how the sale itself works, and our piece on the notice of default and the reinstatement window covers the clock that runs before it.

What is the post-sale window, and where did it come from?

SB 1079 (Skinner), Chapter 202, Statutes of 2020 built it. The policy problem was specific: at trustee's auctions, institutional buyers with cash were sweeping up one-to-four unit homes, sometimes in bundles, and converting owner-occupied and tenant-occupied housing into rental portfolios. Owner-occupants and affordable-housing nonprofits could not compete on auction-day terms.

The Legislature's answer was structural. It stopped treating the gavel as final. SB 1079 added Civil Code section 2924m, which gives defined categories of bidder a chance to come back after the sale and beat the auction price; added the anti-bundling rule at section 2924g(a)(4); added the NOTICE TO TENANT that now appears in every section 2924f notice of sale; and added section 2924n on transfer-of-title reporting.

The mechanics, which AB 1957 leaves intact: an eligible bidder has 15 days after the sale to deliver a nonbinding written notice of intent to bid, and 45 days to submit the bid itself. A trustee's deed that would ordinarily record within 21 days can be held up to 60 where a notice of intent has been filed.

Section 2924m has been amended repeatedly since — by AB 1837 (Stats. 2022, ch. 642), SB 1146 (Stats. 2024, ch. 601), and now AB 1957. It was born with a sunset and has been extended more than once.

Who loses the right to bid after the sale?

The clearest change: on January 1, 2027, "prospective owner-occupant" comes out of the statute.

Under current law that category covers a natural person who submits an affidavit stating they will occupy the property as their primary residence within 60 days and maintain that occupancy for a year, and who is not the borrower or a relative, employee or agent of the borrower. It is the route for an individual who wants to buy a home to live in and was outbid at the auction.

After January 1, 2027 that route is closed. The amended definition of "eligible bidder" reads simply: "Either of the following: (A) An eligible tenant bidder. (B) An eligible community bidder."

From January 1, 2027, if you are an individual who wants to live in the house and you are not already the tenant, the 45-day window is not available to you. Your opportunity is at the auction itself.

There is a second consequence worth naming for anyone bidding. The post-sale overbid risk narrows. An investor who takes a one-to-four unit property at a trustee's sale in 2027 faces a smaller field of parties who can reach back — and on sales that fall outside the eligible-property definition itself — a building with five or more units, or a sale under a junior deed of trust — no field at all.

What is the new "eligible property" test?

This provision does a great deal of work and is easy to miss, because it sits in the definitions rather than in the operative subdivisions. Everything in this section describes law that operates beginning January 1, 2027.

Amended section 2924m(a)(1) creates a defined term, "eligible property." Both bidder categories require residential real property containing four or fewer units sold "at a trustee's sale pursuant to a power of sale contained in a first lien deed of trust or mortgage."

That first-lien limitation is not a legislative invention. Section 2924f(f)(1) has long carried the same phrase, in the provision requiring a fair market value and barring a first sale below 67 percent of it. The phrase is not new to California foreclosure law, but its arrival in section 2924m is new, and that is where it bites: on its face, from 2027 a sale under a junior deed of trust would fall outside the post-sale window. The current text of section 2924m contains no such limit.

For an eligible tenant bidder, two further conditions attach, and both are new:

> "(i) The city or county in which the property is located has issued a certificate of occupancy that was valid on the date of the trustee's sale and the property was not subject to a red tag or a substandard building code violation preventing occupancy on the date of the sale. > > (ii) The fair market value of the property determined pursuant to subdivision (f) of Section 2924f is equal to or less than the maximum Federal Housing Administration loan limits established under Section 1709(b) of Title 12 of the United States Code and published by the United States Department of Housing and Urban Development for the specific metropolitan statistical area in which the property is located on the date of the sale."

Read those together and the tenant pathway now turns on two things that have nothing to do with the tenant: the regulatory condition of the building on the day of the sale, and an FHA-indexed price ceiling for the metropolitan area. Wherever the published FHA limit for an MSA sits below local values, the tenant pathway closes regardless of the tenant's circumstances. For scale, the 2026 FHA one-unit limit for Los Angeles County is $1,249,125, with higher limits for two-, three- and four-unit properties, so the constraint binds hardest at the top of the market and in the Bay Area MSAs rather than across the board.

Note also that the conditions are bidder-dependent. The certificate-of-occupancy and FHA-limit tests apply only to the tenant branch. A community bidder faces the four-unit and first-lien limits but not those two.

What changes for a tenant who wants to buy?

Three things, and the first is easy to state backwards.

A tenant bidder matches; other eligible bidders exceed. The NOTICE TO TENANT in the amended section 2924f puts it plainly: "If you are an 'eligible tenant bidder,' 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." That distinction survives AB 1957 and is easy to get wrong in either direction.

The label changes. "Eligible tenant buyer" becomes "eligible tenant bidder." The underlying conditions carry over: occupancy as a primary residence, a rental or lease agreement predating the notice of default, not a child, spouse or parent of the borrower, and no bankruptcy filing during the 45-day period.

There is a new recorded covenant. The amended definition requires that the tenant bidder will maintain occupancy for at least one year "pursuant to a deed restriction" in the trustee's deed, supported by an affidavit or declaration under Code of Civil Procedure section 2015.5.

That covenant has an enforcement gap worth flagging. It is enforceable as provided in subdivision (i) of the amended section — subdivision (j) today — which vests enforcement in the Attorney General, county counsel, a city attorney or a district attorney. The statute contains no express private right of action for it. What that means for a neighbor, a subsequent purchaser or a title company is not something the text answers.

One branch of the community bidder category picks up a heavier condition: from 2027 an eligible nonprofit corporation must also have "met the requirements of paragraphs (1) and (2) of subdivision (e) of Section 65863.11 of the Government Code." Those paragraphs require the entity to be certified by the department as capable of operating the housing for its remaining useful life, and to obligate itself and its successors to maintain affordability for very low, low or moderate income households for 30 years or the remaining term of existing federal assistance, whichever is greater. That is a far heavier burden than the tenant's one-year covenant.

What else changes, and what does not?

Every subdivision letter in section 2924m shifts. Finality moves from (c) to (b). Reporting moves from (i) to (h). Enforcement moves from (j) to (i). The sunset moves from (m) to (l). Any form, checklist, practice guide or prior article that cites section 2924m(c) will be citing the wrong subdivision on January 1, 2027. If you keep a trustee's sale checklist, that is the line item.

Trustee fees do not increase. Section 2924d's base fee of $475 or 1 percent of the unpaid principal sum, and the supplemental fee of $200 or one-sixth of 1 percent where an eligible bidder files a bid or notice of intent, are unchanged. AB 1957's only edit to that section drops a now-redundant phrase and updates a cross-reference.

Anti-bundling is untouched. The rule at section 2924g(a)(4) is not in this bill.

Section 2924h appears to be re-enacted with conforming cross-references, including the ordinary 21-day and extended 60-day trustee's deed recording rules.

The two Health and Safety Code edits look like housekeeping and mostly are, but one has a quiet consequence. Section 50720.2 is the Foreclosure Intervention Housing Preservation Program, the funding arm of this framework — the source of the money a community bidder is expected to use to top an auction price. Its eligibility runs by reference to section 2924m's bidder categories, so narrowing those categories would appear to narrow who qualifies to borrow. Section 50612(g)(1) works the same way for social housing: the narrowing of "mission-driven nonprofit entity" operates by cross-reference rather than by amendment to that code.

What is still open?

Section 2924m has been construed, but not much. Our research identified three published decisions addressing it — Applegate v. Carrington Foreclosure Services, LLC (2025) 112 Cal.App.5th 356, Bird Rock, and a published Ninth Circuit Bankruptcy Appellate Panel decision. None construes the amended text, which does not operate until 2027, and two of them turn on the prospective owner-occupant category that AB 1957 deletes. Anyone relying on a pre-2027 decision needs to check whether the subdivision it construes still says the same thing, or still carries the same letter.

The interaction between the new first-lien limitation and existing case law is untested, and the stake is concrete. In Bird Rock Home Mortgage, LLC v. Breaking Ground, LP (Sept. 16, 2025, D084138), certified for publication, the Fourth District held that section 2924m reaches nonjudicial foreclosure sales enforcing homeowners association assessment liens. An assessment lien is not a first lien deed of trust or mortgage. On its face the 2027 eligible-property definition would take those sales back out of section 2924m, and the bill contains no finding addressing the decision. Whether a court reads it that way is a question for a court, not for a summary.

The FHA ceiling is a moving target. It is indexed to limits published by HUD for each metropolitan statistical area and measured on the date of the sale. A property eligible in one year may not be in the next, and the operative figure is the one published for that MSA on that day.

The community bidder's funding arm is archived. HCD lists the Foreclosure Intervention Housing Preservation Program under archived programs and states that as of the Budget Act of 2024 the program is no longer receiving an appropriation. Section 50720.2(b)(4) provides that funds not committed to fund managers as of December 31, 2025 are deposited into the Housing Rehabilitation Loan Fund for other housing loan programs. So the pathway AB 1957 preserves is the one whose money has stopped, which may make it narrower in practice than it looks on paper.

This article states the law as of September 27, 2026 and describes a statute that operates January 1, 2027. If you are dealing with a trustee's sale now, the current version of section 2924m governs, including the prospective owner-occupant category.

Our contract disputes page describes how we approach these matters, and our reference on California real estate litigation deadlines collects the other clocks that run alongside them.

Frequently asked questions

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Statutes and case law change, and how they apply depends on the specific facts. Attorney advertising. Prior results do not guarantee similar outcomes. Robert B. Mobasseri, State Bar No. 193193, ROMO Law Group, Encino, California.