If you are a private lender foreclosing on a residential property in California, your borrower may have a powerful new tool to delay your trustee’s sale by up to 90 days — and they do not need your permission to use it.
California Assembly Bill 2424 took effect January 1, 2025, amending Civil Code Section 2924f to introduce mandatory postponement rights for borrowers facing nonjudicial foreclosure. Understanding how this law works, and where it can be challenged, is now essential knowledge for any lender holding a loan secured by California residential real property.
The Two-Tiered Postponement System
AB 2424 created a two-step postponement mechanism that operates entirely at the borrower’s initiative.
Step One: The Listing Agreement Postponement. Under California Civil Code Section 2924f(e)(1), if a borrower delivers a valid listing agreement with a California-licensed real estate broker to the foreclosure trustee, via certified mail or tracked overnight courier, at least five business days before the scheduled sale date, the trustee is required by law to postpone the sale for a minimum of 45 days. The property must also be listed in a publicly available marketing platform, such as the MLS. No lender approval is needed. No court order is required. The postponement is mandatory upon a qualifying submission.
Step Two: The Purchase Agreement Postponement. Under Section 2924f(e)(3), if the first postponement has already been granted and the borrower subsequently delivers a fully executed, bona fide purchase agreement to the trustee, again at least five business days before the rescheduled sale, the trustee must postpone for another 45 days from the date of receipt. The purchase price must equal or exceed the total unpaid balance of all obligations of record secured by the property. Like the first postponement, this one can only be used once.
Combined, these two mechanisms give a borrower up to 90 or more additional days before the trustee’s sale can proceed.
The current version of California Civil Code Section 2924f, as amended by AB 2424, is currently set to be repealed on January 1, 2031, unless the Legislature acts to extend it. Given California’s legislative track record on borrower protection statutes, we will continue to monitor any developments well in advance of that date.
Who Does This Apply To?
This is where many private lenders are caught off guard. AB 2424 applies to all loans secured by residential real property containing no more than four dwelling units, regardless of whether the loan was originated for business or consumer purposes. There is no private lending exception. If your collateral is a 1-to-4 unit residential property, your foreclosure is subject to these rules.
Commercial properties, multifamily properties with five or more units, and vacant land fall outside the statute’s scope.
Can Lenders Fight Back?
The postponements are mandatory when properly triggered, but they are also highly technical. A defective submission does not compel postponement, and this is where lenders have meaningful leverage.
The key defect grounds to scrutinize include:
Timing. If the submission arrives fewer than five business days before the sale, the trustee has no obligation to postpone. The delivery window is strict.
Delivery Method. The statute specifically requires certified mail with the U.S. Postal Service or an overnight courier service with tracking that confirms the recipient’s signature and the date and time of receipt. An improperly delivered submission does not qualify.
Broker Qualification. The listing agreement must be with a California-licensed real estate broker. An out-of-state broker or a sales agent acting in their individual capacity does not satisfy the requirement.
Public Platform Requirement. A private or pocket listing does not qualify. The property must be actively marketed on a publicly available platform.
Source of Submission. The submission must come from the mortgagor or trustor directly. A third-party submission made without clear legal authority may not trigger the mandatory postponement.
The Bona Fide Purchase Agreement Standard. For the second postponement, the purchase agreement must be genuine. A fabricated agreement, a collusive transaction, or one with a purchase price below the total secured debt will not satisfy the statute. This remains an actively developing area of law, and the “bona fide” threshold is likely to be tested in California courts as more cases work their way through the system.
The bottom line: if you receive any submission from your borrower purporting to trigger these rights, your first call should be to counsel to evaluate it for technical compliance before your trustee responds.
What Lenders Should Do Now
Every lender holding loans secured by California 1-to-4 unit residential property should be factoring an additional 90-day buffer into their foreclosure timeline projections for any default scenario. Your trustee should have a documented review process in place to evaluate any AB 2424 submission for compliance defects before accepting a postponement.
On the front end, ensuring your loan documentation is fully compliant at origination remains your most important line of defense. AB 2424 also introduced new disclosure requirements that must be provided to borrowers at or before closing. If your loan documents were generated before January 1, 2025, or were not updated to reflect AB 2424’s requirements, we recommend a review.
Geraci’s Automate platform generates fully compliant California loan documentation that incorporates all current AB 2424 disclosure requirements, so you can be confident your origination package is up to date from day one. If you have not explored Automate for your California lending operations, now is a good time
