California Civil Code Section 2924m gives certain buyers a priority right to purchase one-to-four-unit residential properties sold at nonjudicial foreclosure auctions when the winning bidder was not someone planning to live in the home. The statute opens a post-sale window of up to 45 days during which eligible tenants, prospective owner-occupants, affordable housing nonprofits, and government entities can step in and buy the property before the sale becomes final. It is scheduled to be repealed on January 1, 2031, unless the legislature extends it.1California Legislative Information. California Code CIV 2924m
Which Sales the Statute Covers
Section 2924m applies to nonjudicial foreclosure sales of real property with one to four residential units: single-family homes, duplexes, triplexes, and fourplexes.2California Legislative Information. California Civil Code 2924m Commercial properties and vacant land are outside its reach.
The secondary bidding window is not triggered every time. If a prospective owner-occupant is the last and highest bidder at the auction and submits the required affidavit at the sale or by 5 p.m. the next business day, the sale is final under the normal rules of Section 2924h and no window opens. The eligible bidder process activates only when someone other than a prospective owner-occupant wins the auction, which in practice means an investor, a corporate buyer, or the foreclosing lender took the property.
Who Qualifies as an Eligible Bidder
The statute recognizes several categories, and every bidder must submit a sworn affidavit or declaration identifying the category they fall into.2California Legislative Information. California Civil Code 2924m
Eligible Tenant Buyers
An eligible tenant buyer lived in the property as their primary residence at the time of the trustee’s sale under a rental or lease agreement entered into before the notice of default was recorded. The lease must have been an arm’s-length transaction with the borrower or a prior owner. The tenant cannot be the borrower, cannot be the borrower’s child, spouse, or parent, and cannot be acting as anyone else’s agent.
Tenant buyers hold the single most important advantage in the whole process: they only need to match the highest auction bid, not exceed it. Every other category has to beat the auction price.
Prospective Owner-Occupants
A prospective owner-occupant certifies that they will move into the property as their primary residence within 60 days after the trustee’s deed is recorded and stay for at least one year. The disqualification list is broader than many people expect. It rules out the borrower, the borrower’s child, spouse, or parent, the grantor of a living trust that held title when the notice of default was recorded, employees, officers, or members of a borrower that is an entity, anyone with an ownership interest in the borrower (unless the borrower is publicly traded), and anyone acting as an agent for someone else.
A tenant buyer who also meets the owner-occupancy requirements can qualify in both categories, which opens additional bidding paths.
Nonprofits, LLCs, and Government Entities
The remaining eligible bidders are nonprofit associations or corporations in which an eligible tenant buyer is a voting member or director; eligible nonprofit corporations that hold IRS 501(c)(3) status (and are not private foundations), are headquartered in California, have all board members residing in California, focus primarily on developing or preserving affordable housing, and are registered with the Attorney General’s Registry of Charities and Fundraisers; LLCs wholly owned by one or more qualifying nonprofits; community land trusts; limited-equity housing cooperatives; and government entities including the state, counties, cities, districts, public authorities, and public agencies.
The nonprofit requirements are strict. Having 501(c)(3) status alone is not enough. Affordable housing must be a primary activity, and every board member must live in California.
How Eligible Bidders Find Out the Window Has Opened
When the auction winner is not a prospective owner-occupant, the trustee has 48 hours to post specific information on the website listed in the notice of sale and through a telephone number.2California Legislative Information. California Civil Code 2924m The posting must include the date of the sale, the amount of the last and highest bid, and an address where the trustee can receive bids and documents. It stays up for at least 45 days.
Checking that website promptly after the auction is essential. The first deadline arrives in just 15 days.
The 15-Day Notice of Intent
Any eligible bidder who wants to participate must submit a nonbinding written notice of intent to the trustee no later than 5 p.m. on the 15th day after the sale, or the next business day if the 15th falls on a weekend or holiday. It has to be sent by certified mail, overnight delivery, or another method that confirms the delivery date, and it must include the bidder’s sworn declaration identifying their category, a current telephone number, and a return mailing address.
Filing this notice is what keeps the 45-day window open. If nobody files by day 15, the sale becomes final and the original auction winner takes the property. Missing this deadline is the most common way eligible bidders lose their rights.
Placing the Bid Within 45 Days
Once a notice of intent has been filed, the bidding runs on two tracks.
A representative of all eligible tenant buyers in the property may submit a single bid equal to the full amount of the last and highest auction bid, along with an affidavit confirming that those represented meet the tenant buyer criteria and that they represent all eligible tenant buyers in the property. This matching bid can arrive as late as 5 p.m. on the 45th day after the sale. If accepted, the tenant buyers are deemed the last and highest bidder.
Prospective owner-occupants, nonprofits, LLCs, community land trusts, housing cooperatives, and government entities must submit a bid that exceeds the last and highest auction bid by 5 p.m. on the 45th day. If more than one qualifying bid comes in, the highest wins.
Every bid must be paid in cash, a cashier’s check drawn on a state or national bank, a cashier’s check from a state or federal credit union, or a cashier’s check from an authorized savings institution. Personal checks, wire transfers, and promissory notes do not qualify. Assembling the full purchase price in one of those forms within 45 days is a real practical barrier, especially for individual buyers.
When the Sale Becomes Final
The statute lays out three possible timelines:
- If a prospective owner-occupant wins at auction, the sale is final under the standard conditions of Section 2924h and no secondary window opens.
- If no eligible bidder submits a bid or a notice of intent by day 15, the sale becomes final on that 15th day.
- If an eligible bidder files a notice of intent, the sale remains open until 5 p.m. on the 45th day. A valid matching bid from an eligible tenant buyer or a valid higher bid from another eligible bidder takes the property. If no valid bid arrives by day 45, the original auction buyer’s purchase becomes final.
For the original auction winner, this can mean up to 45 days of uncertainty. During that period the buyer cannot record a trustee’s deed or take possession.
Tenant Protection Duty for Entity Buyers
When the winning eligible bidder is a nonprofit, an LLC, a community land trust, a housing cooperative, or a similar entity rather than an individual, the bidder’s affidavit must affirm a duty to comply with Section 2924o for the benefit of tenants already living in the property. Section 2924o imposes ongoing obligations designed to preserve housing stability for existing tenants.
Reporting and Sunset
A copy of the executed trustee’s deed, together with the winning bidder’s attached affidavit or declaration, must be submitted to the California Attorney General.3California Department of Justice. Residential Foreclosure Sales to Eligible Bidders That reporting requirement lets the state track whether the process is working as intended and whether purchasers are meeting their declared commitments.
Section 2924m will be repealed on January 1, 2031, unless the legislature acts before then. The current expiration date was set by SB 1146 in 2024, which extended the earlier sunset. Anyone building a long-term acquisition strategy around this process should watch for legislative activity as that date approaches.