How a California Trustee's Sale Works, From Notice of Default to Surplus

California foreclosures almost never go through a courtroom. The lender uses the power of sale in the deed of trust, and a trustee runs a public auction called a trustee’s sale under Civil Code §2924 and the sections that follow. Every step has a required notice and a required waiting period, and the paper trail those steps leave behind is how Fred Yadegar finds out whether a homeowner in Los Angeles County or Orange County is owed money, and whether the sale itself can be challenged.

Notice of Default and the three-month wait

Before recording anything, the servicer of a first mortgage on an owner-occupied home must contact you, or diligently try to, to discuss alternatives to foreclosure at least 30 days before the Notice of Default (Civ. Code §2923.5). The Notice of Default is then recorded and mailed to you. It states the amount needed to bring the loan current, identifies the trustee, and starts a clock.

Nothing else can happen for at least three months (§2924). During that period, and until five business days before the sale date, you can reinstate the loan by paying the missed amounts plus allowed fees and costs rather than the full balance (§2924c). Lenders are not required to remind you of that.

Notice of Sale, postponements, and the 2025 changes

After the three months, the trustee records a Notice of Trustee’s Sale, posts it on the property and in a public place, mails it to you, and publishes it in a newspaper, all at least 20 days before the sale (§2924f). The notice states the date, time, and place of the auction, the trustee’s contact information, and an estimate of the unpaid balance.

Sales are postponed constantly. The trustee announces a postponement by public declaration at the scheduled time and place, and no new written notice is required unless the postponements add up to more than a year (§2924g). Two changes took effect on January 1, 2025 under AB 2424. A borrower who delivers a signed listing agreement to the servicer at least five business days before the sale can postpone it 45 days. And if the highest bid at the first sale would be less than 67 percent of the property’s appraised value, the sale is postponed at least seven days (§2924h, as amended). Both rules bear on the size of any surplus.

Auction day: credit bids, third-party bidders, and the deed

The sale is a public auction held on a business day in the county where the property sits. The foreclosing lender usually opens with a credit bid, meaning it bids some or all of the debt it is owed without putting up cash (§2924h). If nobody outbids the lender, the lender takes the property, no cash changes hands, and there is no surplus.

Third-party bidders must pay in cash or cashier’s check, and the sale is final when the trustee accepts the last and highest bid. For some residential properties of one to four units, a post-auction window under Civil Code §2924m lets eligible tenant buyers and prospective owner-occupants submit a matching or higher bid for up to 45 days, which can delay the deed. The trustee then executes and records the Trustee’s Deed Upon Sale to the winning bidder. That recorded deed is the document that starts the surplus clock under §2924j.

What the trustee does with the money

The trustee applies the sale price in the order set by Civil Code §2924k: the costs and expenses of the sale including the trustee’s fees, then the foreclosing loan, then junior liens in order of priority, then the former owner or the former owner’s successor in interest. Within 30 days after the deed is executed, the trustee mails notice of any surplus to everyone with a recorded interest, and claimants have 30 days from the mailing to submit a written claim signed under penalty of perjury. Disputed money goes to the superior court in the county of sale. The claim itself is laid out on our overage and surplus funds recovery page, and the 90 days that follow the sale, including the eviction case, are on post foreclosure assistance.

How to read the recorded documents

Three documents at the county recorder tell the whole story. Los Angeles County records are held by the Registrar-Recorder/County Clerk in Norwalk, and Orange County records by the Clerk-Recorder in Santa Ana.

• The Notice of Default names the trustee and the beneficiary and gives the reinstatement figure as of its date. Compare its recording date to the Notice of Sale; fewer than three months between them is a defect.
• The Notice of Trustee’s Sale carries the trustee sale number, the trustee’s address and phone, and the estimated unpaid balance.
• The Trustee’s Deed Upon Sale recites the amount of the unpaid debt together with costs and the amount paid by the grantee, the buyer. Subtract the first from the second. A positive number is your surplus before junior liens.

The trustee is not the bank and not the new owner. If the sale ran off the rails at any of these steps, our wrongful foreclosure page explains the remedies.

What to do right now

• Write down the property address and any trustee sale number from the notices
• Pull, or ask us to pull, the Notice of Default, the Notice of Trustee’s Sale, and the Trustee’s Deed Upon Sale
• Compare the debt with costs to the price paid; a positive difference is a surplus
• File a change of address so the trustee’s notice reaches you
• Do not sign with anyone offering to recover your money until you have checked their license
• Call before the 30-day claim window closes

Why call Fred

Fred Yadegar reads trustee’s sale records the way a mechanic listens to an engine: for the part that is missing. That is how a surplus gets found and how a defective notice gets spotted. He serves Los Angeles County and Orange County. You’ll be dealing with a licensed California attorney, not a recovery company, and the first review of your documents costs nothing.