Updated on September 1, 2025

California Senate Bill 1079 was introduced to curb the bulk purchase of foreclosed homes by large investors and corporations. This bill creates opportunities for “Eligible Bidders,” such as prospective owner-occupants, tenant buyers, and certain nonprofit organizations, to have the first chance to purchase a foreclosed property after a trustee’s sale. By allowing individuals and nonprofits to intervene in foreclosure auctions, SB 1079 aims to reduce the number of vacant homes in California and provide more equitable opportunities for property acquisition. However, this law also introduces complexities in the foreclosure process, which can give rise to legal disputes concerning ownership rights, eligibility requirements, and compliance with SB 1079 procedures.

Key Takeaways from SB 1079 (California Foreclosure Law)

• SB 1079 gives Eligible Bidders (individuals, nonprofits, tenant buyers) a 45-day chance to buy foreclosed homes after auction.
• Buyers must send a Notice of Intent within 15 days and submit full payment by day 45.
• Eligible Bidders must meet strict criteria, including primary residence intent and non-affiliation with owners.
• Trustees must disclose auction details online within 48 hours and notify tenants of purchase rights.

What Is California SB 1079 and Why Was It Introduced?

California Senate Bill 1079 is now the law in California. It provides a procedure for “eligible buyers” to bid on foreclosed property after a trustee’s sale. Introduced by State Senator Nancy Skinner, SB 1079 aims to prevent corporations or investors from bulk purchasing foreclosed homes and reduce the number of vacant homes in California by giving certain categories of “Eligible Bidders” the first right of refusal to buy a foreclosed property. A “right of first refusal” is a contractual agreement that gives one party the exclusive right to purchase an asset, like real estate, before it’s offered to anyone else. SB 1079 applies to all residential properties with one to four housing units.  Here, the right of first refusal applies to a class of individuals (a type of eligible buyer) as opposed to one person in particular .

Also read – Attorney Zachary Schorr Successfully Obtains Partition of 2 Properties

How Does the SB 1079 Foreclosure Process Work in California?

When a property goes into foreclosure, it is entrusted to a trustee to try and sell the property in order to recoup any losses. The trustee can sell the property at a public auction where anyone can bid. At a typical auction, the winner is the highest bidder, however under SB 1079 a foreclosed home may go to an “Eligible Bidder” instead. After the initial bids at a foreclosure auction are received, certain “Eligible Bidders” have a 45 day window within which to match or exceed the highest bid at the trustee’s sale.

Who Qualifies as an Eligible Bidder Under SB 1079?

As defined in SB 1079, an “Eligible Bidder” can be:

A. Prospective Owner-Occupant – a natural person who presents to the trustee an affidavit or declaration, pursuant to Section 2015.5 of Code of Civil Procedure, that:

1. 1. They will occupy the property as their primary residence within 60 days of the Trustee’s Deed being recorded.
   2. Will maintain their occupancy for at least 1 year.
   3. They are not any of the following:

• • • The mortgagor or Trustor.
    • The child, spouse or parent of the mortgagor or trustor.
    • The grantor of a living trust that was named in the title to the property when the notice of default was recorded.
    • An employee, officer, or member of the mortgagor or trustor.
    • A person with an ownership interest in the mortgagor, unless the mortgagor is a publicly traded company.
    • They are not acting as the agent of any other person or entity in purchasing the property.

B. Eligible Tenant Buyer – a natural person who at the time of the trustee’s sale:

1. 1. Is occupying the property as their primary residence;
   2. Is occupying the property under a rental or lease agreement entered into as the result of an arm’s length transaction with the mortgagor or trustor on a date prior to the recording of the Notice of Default against the property,
   3. Is not the mortgagor or trustor, or the child, spouse or parent of the mortgagor or trustor.
   4. Is not acting as the agent of any other person or entity in purchasing the real property. Submission of a bid pursuant to paragraph (3) of subdivision (c) does not violate this subparagraph.
   5. Has not filed a bankruptcy petition at any time during the period from the date of the trustee’s sale of the property to the 45th day after the trustee’s sale.

C. A nonprofit association, nonprofit corporation, or cooperative corporation in which an eligible tenant buyer is a voting member or director.

D. An eligible California nonprofit whose primary activity is the development and preservation of affordable rental housing.

E. A limited partnership or limited liability company in which the managing general partner or managing member is an eligible California nonprofit corporation whose primary activity is the development and preservation of affordable housing.

F. A community land trust.

G. A limited-equity housing cooperative.

H. The State of California, the Regents of the University of California, a county, city, district, public authority, or public agency, and any other political subdivision or public corporation in California.

How Can an Eligible Bidder Legally Purchase a Foreclosed Property Under SB 1079?

Eligible Tenant Buyers may submit a bid that is equal to the last and highest bid at the trustee auction. All other Eligible Bidders can purchase the property if they exceed the last and highest bid placed at the trustee auction and that bid is higher than that placed by any competing eligible bidders.

Step 1:

Send a Written Notice of Intent to Bid so that the trustee receives it no more than 15 days after the trustee’s sale.

Step 2:

Submit a bid so that it is received by the trustee before 5:00 PM on the 45^th day after the trustee’s sale. The bid includes the funds and an affidavit identifying which category of Eligible Bidder you belong to and that you meet the criteria for that category. Payment must be for the full amount and in cash via a cashier’s check.

What Are the Legal Obligations of the Trustee Under SB 1079?

Within 48 hours after the trustee sale a trustee must make information about the trustee’s sale available online and via a phone number. This includes: the date of the trustee’s sale, the amount of the last and highest bid, and an address where they can receive documents. The website and phone number must be shown on the Notice of Sale and must be free of charge and available 24/7.

The Notice of Sale must include the proper notice to any tenants of their rights to purchase the property after the trustee auction pursuant to SB 1079.

At Schorr Law, we understand the challenges and potential conflicts that may arise from California SB 1079. Whether you are an eligible buyer navigating the post-foreclosure bidding process, or a seller dealing with disputes over ownership or auction outcomes, our experienced los angeles real estate attorneys are here to help. SB 1079 has added layers of regulation that, while designed to empower certain buyers, can also lead to complications if the process is not properly followed.

Our real estate attorneys at Schorr Law have extensive experience handling property disputes, including foreclosure matters, trustee sales, and even property transfers under SB 1079. We can assist you in resolving eligible bidder conflicts, complications surrounding trustee sales, and other discrepancies that may arise during property purchases. Don’t wait until small issues become major legal challenges—contact us today to protect your property rights and navigate the complexities of SB 1079 with confidence. Call our Los Angeles office today at 310-954-1877 or fill out our contact form here.

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