For the prior video in this series covering the proper noticing of the date set for a trustee’s sale, click here.
An irrevocable offer to purchase a property in foreclosure
A trustee’s sale is a public auction by private agreement where the property is sold to the highest bidder. [Calif. Civil Code §2924h]
Before the auction begins, the trustee may:
- demand all prospective bidders show evidence of their financial ability to pay as a precondition to recognizing their bids; and
- hold the prospective bidders’ amounts to be bid. [CC §2924h(b)(1)]
A bidder at auction can tender their bid amount in U.S. dollars in the form of:
- cash;
- a cashier’s check drawn on a state or national bank;
- a check issued by a state or federal thrift, savings bank or credit union; or
- a cash equivalent designated by the trustee in the NOTS, such as a money order. [CC §2924h(b)(1)]
Each bid made at a trustee’s sale is an irrevocable offer to purchase the property. However, any subsequent higher bid cancels a prior bid. [CC §2924h(a)]
The trustee’s sale is considered final on the trustee’s acceptance of the last and highest bid. [CC §2924h(c)]
Once the highest bid has been accepted by the trustee, the trustee may require the successful bidder to immediately deposit the full amount of the final bid with the trustee. [CC §2924h(b)(2)]
If the successful bidder tenders payment by a check issued by a credit union or a thrift, the trustee can refrain from issuing the trustee’s deed until the funds become available. [CC §2924h(c)]
Failure to deliver payment of a bid
If a successful bidder tenders payment by check and the funds are not available for withdrawal:
- the trustee’s sale is automatically rescinded; and
- the trustee will send the successful bidder a notice of rescission for failure of consideration. [CC §2924h(c)]
To hold a new trustee’s sale auction, the trustee sets a new trustee’s sale date and records, serves and publishes a new NOTS. The new NOTS follows all the same statutory requirements as the original NOTS.
The successful bidder who fails to tender payment when demanded is liable to the trustee for all resulting damages, including:
- court costs;
- reasonable attorney fees; and
- the costs for recording and serving the new NOTS. [CC §2924h(d)]