AB 1158 California Assembly · 2025-2026 Regular Session

Mortgages.

Summary

Existing law provides that a trustee's sale of property under a power of sale contained in a deed of trust or mortgage on real property containing one to 4 residential units is not final until the earliest of various time periods. Existing law provides specified eligible bidders, defined to include prospective owner-occupants and eligible nonprofit corporations with certain attributes, various rights in connection with those sales, and sets forth procedures for eligible bidders to submit bids after those sales. Existing law authorizes the Attorney General, a county counsel, a city attorney, or a district attorney to bring an action to enforce these provisions as specified. This bill would remove prospective owner-occupants and eligible nonprofit corporations from the definition of "eligible bidder." The bill would apply the provisions described above only to trustee's sales of eligible property, as defined. The bill would require eligible bidders who submit bids pursuant to the procedures described above to include in the bid an amount equal to 1.2% of the last and highest bid at the trustee's sale. The bill would authorize the last and highest bidder at a trustee's sale to bring an action against an eligible bidder, as specified. The bill would make conforming changes.

Issues: ✓ Housing

Bill status failed 1 of 4 stages cleared

Introduction

Feb 2025

Committee Review

Floor Vote

Governor

Introduced Feb 20, 2025 Last action Feb 2, 2026

Maddy AI version diff · 3 comparisons

What changed between versions

03/28/25 - Amended Assembly → 04/21/25 - Amended Assembly · 6 edits · Apr 21, 2025

MODERATE

AB 1158 was amended to remove 'prospective owner-occupants' and standalone 'eligible nonprofit corporations' from the definition of eligible bidder in trustee's sale (foreclosure) proceedings. The bill now limits post-sale bidding rights to entities directly connected to eligible tenant buyers, such as nonprofits where a tenant buyer is a voting member or director, community land trusts, and public agencies. The scope was also narrowed to apply only to 'eligible property' as defined (first lien, valid certificate of occupancy, four or fewer units, at or below FHA loan limits).

Scope change

The bill's scope was narrowed in two ways: (1) it now applies only to 'eligible property' meeting all defined criteria (first lien, valid occupancy certificate, four or fewer units, at or below FHA loan limits) rather than broadly to one-to-four unit properties; and (2) the pool of eligible bidders was reduced by eliminating prospective owner-occupants and standalone nonprofit corporations, limiting post-sale bidding rights primarily to entities directly connected to current tenant buyers.

ELIGIBILITY

Removed 'prospective owner-occupant' as a defined term and as a category of eligible bidder. Previously, any natural person who would occupy the property as their primary residence within 60 days and maintain occupancy for at least one year could submit a post-sale bid. This right no longer exists under the amended bill.

Removed the standalone 'eligible nonprofit corporation' category that required an IRS 501(c)(3) determination letter, principal place of business in California, all board members residing in California, primary activity of affordable housing development, and registration with the Attorney General's Registry of Charities. Nonprofits can now only bid if an eligible tenant buyer is a voting member or director.

The eligible bidder definition was restructured. It now includes: (A) eligible tenant buyers, (B) nonprofit associations/corporations/cooperatives where an eligible tenant buyer is a voting member or director, (C) LLCs wholly owned by such nonprofits, (D) community land trusts, (E) limited-equity housing cooperatives, and (F) public entities. The prior version also included prospective owner-occupants and standalone eligible nonprofit corporations.

SCOPE

The post-sale bidding provisions now apply only to 'eligible property' as defined: residential real property under a first lien deed of trust, with a valid certificate of occupancy, four or fewer units, and fair market value at or below the maximum FHA loan limit for the metropolitan statistical area. The prior version referenced property containing one to four residential units pursuant to Section 2924g without the full set of eligibility criteria.

FISCAL

The fiscal committee designation changed from 'no' to 'yes,' indicating the bill now carries a state or local fiscal impact that requires fiscal committee review.

REQUIREMENT

Added language requiring that if the winning bid is placed by an eligible bidder described in subparagraphs (B) through (E) of the eligible bidder definition, the affidavit or declaration must affirm the bidder's duty to comply with subdivision (a) of Section 2924o for the benefit of tenants occupying the property.

02/20/25 - Introduced → 03/28/25 - Amended Assembly · 8 edits · Mar 28, 2025

MODERATE

AB 1158 was substantially expanded from a nonsubstantive cleanup of Section 2924m to a major overhaul of California's trustee's sale framework. The amended bill adds a new 'eligible property' definition that caps coverage at properties with fair market value at or below FHA loan limits, requires a valid certificate of occupancy, and limits applicability to first-lien foreclosures on properties with four or fewer units. It also introduces a 1.2% premium requirement for post-sale bids, authorizes the last and highest bidder to sue an eligible bidder, adds new trustee fee provisions in Section 2924d, and amends Sections 50612 and 50720.2 of the Health and Safety Code.

SCOPE

New definition of 'eligible property' requires: (1) first-lien deed of trust or mortgage, (2) valid certificate of occupancy with no red tag or substandard building code violation, (3) four or fewer residential units, and (4) fair market value at or below the maximum FHA loan limit for the property's metropolitan statistical area. The post-sale bid provisions now apply only to eligible property rather than all 1-4 unit properties.

The bill's scope expanded from amending only Section 2924m of the Civil Code to also amending Sections 2924d and 2924h of the Civil Code and Sections 50612 and 50720.2 of the Health and Safety Code.

REQUIREMENT

Eligible bidders submitting post-sale bids must include an amount equal to 1.2% of the last and highest bid at the trustee's sale, in addition to the full bid amount. This applies to both eligible tenant buyer bids (paragraph 2) and other eligible bidder bids (paragraph 3).

ENFORCEMENT

The bill authorizes the last and highest bidder at a trustee's sale to bring an action against an eligible bidder, as specified, providing a new private enforcement mechanism.

New Section 2924h provisions make bids irrevocable offers, allow trustees to require evidence of ability to pay before recognizing a bid, create a misdemeanor penalty (up to $2,500 fine) for willful failure to deliver final bid funds or cancellation of payment instruments, and prohibit bid-fixing or agreements not to bid with penalties up to $10,000 fine and one year jail time.

FISCAL

New Section 2924d provisions establish tiered caps on trustee's and attorney's fees based on unpaid principal balance (ranging from $475 base for loans under $50,000 to graduated percentages for larger loans), plus an additional fee of up to $200 or one-sixth of 1 percent of the unpaid principal sum when eligible bidders participate. Also prohibits kickbacks for referral of business involving acts required by the article, with treble damages liability.

Fiscal committee review changed from 'no' to 'yes,' indicating the bill now has state fiscal impact requiring Legislative Fiscal Office analysis.

DEFINITION

New requirement that eligible tenant buyers must maintain occupancy for at least one year pursuant to a recorded deed restriction (subparagraph F of paragraph 2), adding a deed restriction condition not present in the introduced version.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Feb 2, 2026

Lower · Passed

From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

lower

May 23, 2025

Lower · Passed

In committee: Held under submission.

lower

May 7, 2025

Committee

In committee: Set, first hearing. Referred to APPR. suspense file.

lower

Apr 22, 2025

Lower · Passed

From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 12. Noes 0.) (April 22). Re-referred to Com. on APPR.

lower

Apr 22, 2025

Committee

Re-referred to Com. on JUD.

lower

Apr 21, 2025

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on JUD. Read second time and amended.

lower

Apr 10, 2025

Committee

Re-referred to Com. on JUD. pursuant to Assembly Rule 96.

lower

Apr 1, 2025

Committee

Re-referred to Com. on B. & F.

lower

Mar 28, 2025

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on B.&F. Read second time and amended.

lower

Mar 28, 2025

Committee

Referred to Coms. on B.&F. and JUD.

lower

Feb 21, 2025

Lower · Passed

From printer. May be heard in committee March 23.

lower

1 primary · 0 co-sponsors