Legal Update – 2025
Listing Agreements and Foreclosure: Delivery of listing agreement extends foreclosure sale by 45 days.
Below content provided by California Association of Realtors (12-18-2024)
When foreclosing on residential 1 to 4 property, this law requires an additional 45 days beyond the scheduled date of sale if the trustee receives a listing agreement from the trustor at least 5 business days before the scheduled date of sale. There is an additional postponement right based on obtaining an executed purchase agreement.
Prohibits the trustee from selling the property at the initial trustee’s sale for less than 67% of the amount of the fair market value of the property.
45- day postponement based on listing
For residential 1 to 4 properties subject to a power of sale contained in any deed of trust or mortgage, the sale shall not be conducted until the expiration of an additional 45 days following the scheduled date of sale when:
- The trustee receives five business days prior to the scheduled date of sale
- A listing agreement
- With a California licensed real estate broker
- To be placed in a publicly available marketing platform
- Sent by certified mail with USPS or other overnight mail courier service
- With tracking information that confirms the recipient’s signature and date and time of receipt and delivery
- This postponement may be used only one time
45- day postponement based on receipt of executed purchase agreement
If the scheduled date of sale has been postponed in the above manner the trustee shall postpone the scheduled date of sale for 45 days following receipt of an executed purchase agreement when:
- The trustee receives five business days before the scheduled date of sale
- A copy of a purchase agreement for sale of the property
- Purchase agreement must be bona fide and fully executed
- Must include name of buyer, sales price, closing date and acceptance by the designated escrow agent
- Purchase price must be equal to or greater than the amount of the unpaid balance of all obligations of record secured by the property
- Sent by certified mail with USPS or other overnight mail courier service
- With tracking information that confirms the recipient’s signature and date and time of receipt and delivery
- This postponement may be used only one time
Requirement of fair market value
With respect to residential real property containing no more than four dwelling units that is subject to a power of sale contained in a first lien deed of trust or mortgage, the trustee is prohibited from selling the property at the initial trustee’s sale for less than 67% of the amount of the fair market value of the property. If the property remains unsold after the initial trustee’s sale, it is required that the trustee postpone the sale for at least 7 days and authorizes that the property to be sold thereafter to the highest bidder. The beneficiary, or authorized agent shall provide to the trustee a fair market value of the property at least 10 days prior to the initially scheduled date of sale.
Comment: Under California law, the time from when a Notice of Default is recorded to the scheduled trustee’s sale is approximately 110 days. Since 2021, for properties subject to the Real Estate Settlement Procedures Act (RESPA) the earliest a Notice of Default can be filed is 120 days after the loan becomes delinquent. With this latter requirement, the total time a borrower has from default to the date of sale is 230 days for properties subject to RESPA.
In addition to the 230-day timeline indicated above, AB 2424 may add up to 85 more days to the foreclosure process as follows: Delivery of a listing to the trustee five business days prior to date of sale will give the borrower 45 more days beyond the scheduled date of sale. And delivery of an executed purchase agreement five business days prior to the date of sale may effectively add another 40 days (not 45 days since the second postponement is calculated from the time the trustee receives the purchase agreement). See our Foreclosure Timeline chart.
Assembly Bill 2424 is codified as Civil Code§§2923.5, 2923.55, 2924f and 2932.2. Effective January 1, 2025.
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