The 67% Minimum Bid Rule at California Foreclosure Auctions

For a long time, one of the worst parts of foreclosure in California was how cheaply a home could sell at auction.

If the lender’s opening bid was close to the loan balance and no one bid higher, the property could change hands for far less than it was worth, and the owner’s equity went with it.

Since January 1, 2025, California has a floor for the first auction: on most one-to-four unit homes, the trustee cannot sell for less than 67% of fair market value at the first sale where bids can be made.

Los Angeles County runs a separate, five-year tax-default auction process for unpaid property taxes, with its own surplus-proceeds rules — see our breakdown of the five-year countdown before LA County auctions a tax-defaulted home.

For a foreclosure auction specifically, a borrower’s last chance to avoid it is the statutory right to reinstate the loan, which closes five business days before the sale.

This guide explains exactly what the rule says, which properties it covers, how it affects your equity, and how surplus funds work if your home does sell at auction.

Where the Rule Comes From

The 67% rule was added to Civil Code 2924f by AB 2424, which took effect January 1, 2025. AB 1521, a 2025 cleanup bill effective January 1, 2026, clarified the wording so the floor applies at “the first sale at which a bid can be made,” which matters because sale dates are often postponed before any bidding happens.

It is sometimes confused with SB 1079, an earlier law effective in 2021. SB 1079 created Civil Code 2924m, which gives tenants, prospective owner-occupants, nonprofits, and public agencies a window after the auction to match or beat the winning bid on one-to-four unit homes. That law affects who ends up owning the property after a sale. It does not set a minimum price. The 67% floor comes from AB 2424.

What the Rule Requires

Under Civil Code 2924f(f):

• Which properties: residential real property with no more than four dwelling units, foreclosed under a first-lien deed of trust or mortgage. There is no owner-occupancy requirement. Foreclosures by a second mortgage or HELOC lender are not covered.
• The valuation: the lender or its agent must give the trustee a fair market value at least 10 days before the initially scheduled sale. The estimate must be made within six months of that date and can come from a broker’s opinion, an appraisal, or an automated valuation model.
• The floor: the trustee cannot sell the property at the first sale at which a bid can be made for less than 67% of that value.
• If no one meets the floor: the trustee must postpone the sale for at least seven days. After that, the property may be sold to the highest bidder, with no minimum.
• Limits: the trustee can rely on the value it receives and has no duty to verify it, and a failure to follow the rule does not by itself invalidate a sale to a good-faith buyer.
• Each notice of sale: the rule applies to the initial sale under each notice of sale.

How It Affects Your Equity

Here is a simple illustration. Say the home is valued at $600,000 and the first loan plus foreclosure costs total $250,000.

Two things stand out. First, the floor protects real money compared with a sale near the loan balance. Second, even at the floor you give up about a third of the home’s value compared with a normal sale. And if no one bids 67% at the first sale, the property can sell to the highest bidder a week or more later, with no floor at all.

The value used is also the lender’s number, not yours. If the estimate is low, the floor is low. That is one reason to get your own idea of value early.

Any money left after the first loan is not automatically yours either. Junior liens, such as a second mortgage, HELOC, or HOA lien, are generally paid from the surplus before the former owner.

What the Rule Does Not Change

• It does not stop or delay the foreclosure itself, apart from the seven-day postponement if no one meets the floor.
• It does not cover commercial property, buildings with five or more units, or foreclosures by a junior lender.
• It does not change your reinstatement deadline or the post-sale bidding window under Civil Code 2924m.
• It does not require the lender to use the highest possible valuation.

Surplus Funds: What They Are and How to Claim Them

When a trustee’s sale brings in more than the amount owed on the foreclosing loan and the costs of the sale, the extra is called surplus funds. Under Civil Code 2924j:

1. Within 30 days after the trustee’s deed is executed, the trustee must send notice to people who may have a claim to the surplus, including the former owner and junior lienholders.
2. Claimants generally must submit a written claim no later than 30 days after the trustee sends that notice.
3. The trustee uses due diligence to sort out the priority of the claims. If it cannot do so within 90 days after the 30-day notice period, it must deposit the funds with the court clerk or file an interpleader action within 10 days, and the court decides who gets paid.

What this means in practice:

• Keep your mailing address current with the trustee and your servicer, even after you move out.
• Respond to any surplus notice right away, and keep copies of everything you send.
• Be careful with third parties who contact you offering to “recover” your funds for a large percentage. You can often file the claim yourself, or with an attorney you choose.

We walk through the claim process step by step in our guide to foreclosure surplus funds in California.

The Floor Is a Backstop, Not a Plan

The 67% rule makes the worst outcome less bad. It does not make an auction a good outcome. A sale before the auction, whether through an agent, a lender-approved short sale, or a direct cash sale, almost always keeps more of your equity, avoids the surplus claims process, and lets you control the move-out date.

If you are still before the sale, two things are worth knowing. You can reinstate the loan until five business days before the sale (Civil Code 2924c(e)), and AB 2424 may let you postpone the sale while you list the home.

See our AB 2424 guide for those requirements, and our California foreclosure timeline to see where you are in the process. For a local example of how the same countdown applies, see our South El Monte foreclosure timeline.

Run Your Own Numbers

1. Get a realistic estimate of your home’s current value.
2. Ask your servicer for the payoff on the first loan and find out what you owe on any second loan, HELOC, or HOA liens.
3. Multiply the value by 0.67 and subtract everything owed. That is your rough auction-floor scenario.
4. Compare it with what a listing or a direct sale would leave you after costs.
5. Review the comparison with a HUD-approved housing counselor or a California foreclosure attorney.

Common Questions

Does the 67% rule apply at every auction? No. It applies at the first sale at which a bid can be made under each notice of sale. If the property does not sell at that price, the trustee postpones at least seven days and can then sell to the highest bidder.

Will the trustee send me the surplus automatically? No. The trustee must notify potential claimants, but you have to submit a written claim, generally within 30 days of that notice. If claims are disputed or unclear, the funds may end up with the court, which adds time.

Can I challenge the lender’s valuation? The statute lets the trustee rely on the value provided without verifying it. If you believe the valuation is seriously wrong, talk with a foreclosure attorney about your situation before the sale date.

Keep More of What You’ve Built

If you have equity and a sale date on the calendar, it is worth comparing your options now while you still control the outcome. We either buy directly or bring a vetted cash buyer, and we can close around your sale date. If listing would net you more, we will say so. Learn more about selling a house in foreclosure, call (424) 435-2326, or request a no-obligation offer online.

Want to see what other California sellers say about working with us? Find Cash Home Buyers CA on Google for reviews, or call us at (424) 435-2326.