Section 25548.5.
Cal. Health and Safety Code - HSC § 25548.5.
in effectThe exemptions set forth in Sections 25548.2 and 25548.3 shall not apply:
(a)
If, after foreclosure or its equivalent is conducted, the lender does not undertake to sell, re-lease property held pursuant to a finance lease, whether by a new finance lease or by substitution of the lessee, or otherwise undertake to be divested of the property in a reasonably expeditious manner, using whatever commercially reasonable means are relevant or appropriate with respect to the property, taking all facts and
circumstances into consideration. For purposes of establishing that a lender is seeking to sell, re-lease property held pursuant to a finance lease, whether by a new finance lease or substitution of the lessee, or be divested of property in a reasonably expeditious manner, the lender may use whatever commercially reasonable means as are relevant or appropriate with respect to the property, or may employ the following means:
(1)
For purposes of this subdivision, the exemption set forth in subdivision (a) of Section 25548.2 shall apply following foreclosure or its equivalent, if, within 12 months following foreclosure or its equivalent, the lender does either of the following:
(A)
Lists the property for sale, re-lease, or other disposition with a broker, dealer, or agent who deals with that type of property.
(B)
Advertises the property for sale, re-lease, or other disposition on at least a monthly basis in either of the following:
(i)
A real estate publication or trade or other publication suitable for advertising the property.
(ii)
A newspaper of general circulation, which is a newspaper with a circulation over 10,000 or one suitable under any applicable federal, state, or local rules of court for publication required by court order or rules of civil procedure, covering the area where the property is located.
(2)
For purposes of this subdivision, the 12-month period shall begin to run from the date that the lender acquires marketable title to the property if the lender, after the expiration of any redemption or other waiting period provided by law, has acted diligently to acquire marketable title. If
the lender has failed to act diligently to acquire marketable title, the 12-month period shall begin to run on the date of foreclosure or its equivalent.
(b)
If, after foreclosure or its equivalent, the lender does not comply with all applicable statutes, regulations, or ordinances that require the disclosure of information or conditions regarding the property to any person.
(c)
If the fiduciary’s negligent or intentional or reckless conduct causes or contributes to the release or threatened release of a hazardous material at, from, or in connection with a property held by the fiduciary as part of the fiduciary estate.
(d)
With respect to liability that arises from a voluntary removal or remedial action taken by a fiduciary if, prior to initiating a voluntary removal or remedial action, the fiduciary does not
notify the appropriate agency of the fiduciary’s intent to conduct that action.
(e)
With respect to liability that arises from conduct of, or ownership of the property by, the lender or fiduciary, other than in its capacity as a lender or fiduciary.
(f)
Where the loan or obligation or fiduciary relationship or fiduciary transaction is structured for the purpose of evading liability for a release or threatened release of hazardous materials.
(g)
If the fiduciary is both a beneficiary and fiduciary with respect to the same fiduciary estate, or as a fiduciary, receives benefits that exceed customary or reasonable compensation for the administration of the property permitted under other applicable law.
(h)
To the extent of the actual benefit, if
any, realized by a lender upon the disposition of property acquired through foreclosure or its equivalent as a result of a removal or remedial action undertaken by another person.
(i)
If the lender participated in the management of the property before foreclosure or its equivalent, except that the lender’s liability shall be limited to any release or threatened release which occurred while the lender participated in the management of the property.
(j)
If the lender, by an act or failure to act caused or contributed to the release or threatened release of the hazardous material.
(k)
If the lender made, secured, held, or acquired the loan or obligation primarily for investment purposes.
(
l
)
If the lender outbids, rejects, or fails to act
upon an offer of fair consideration for the property acquired through foreclosure or its equivalent, unless the lender is required, to avoid liability under federal or state law, to make a higher bid, to obtain a higher offer, or to seek or obtain an offer in a different manner. For purposes of this subdivision, the following terms shall have the following meaning:
(1)
(A)
“Fair consideration” means the sum of all of the following less the amounts specified in subparagraph (B):
(i)
The value of the security interest or loan or obligation calculated as an amount equal to or in excess of, the sum of the outstanding principal, or comparable amount in the case of a finance lease, owed to the lender immediately preceding the acquisition of full title pursuant to foreclosure or its equivalent.
(ii)
Any unpaid interest, rent, or penalties, whether arising before or after foreclosure or its equivalent.
(iii)
All reasonable and necessary costs, fees, or other charges incurred by the lender incident to workout, foreclosure or its equivalent, retention, maintaining the business activities of the enterprise, preserving, protecting, and preparing the property prior to sale, re-leasing the property held pursuant to a finance lease, whether by a new finance lease or substitution of the lessee, or other disposition.
(iv)
The lender’s costs incurred for any removal or remedial action, including but not limited to, response costs for response action taken by the lender under Section 107(d)(1) of the Comprehensive Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. Sec. 9607(d)(1)).
(B)
In determining fair consideration, the following amounts shall be subtracted from the sum calculated pursuant to subparagraph (A):
(i)
Any amounts received by the lender in connection with any partial disposition of the property.
(ii)
Net revenues received as a result of maintaining the business activities of the enterprise.
(iii)
Any amounts paid by the borrower subsequent to the acquisition of full title pursuant to foreclosure or its equivalent.
(C)
In the case of a lender holding a junior security interest, junior loan, or junior obligation, “fair consideration” is the value of all outstanding higher priority security interests, loans or obligations plus the value of the security interest, loan or obligation held by
the junior holder, calculated as set forth in this paragraph.
(2)
“Outbids, rejects, or fails to act upon an offer of fair consideration” means that the lender outbids, rejects, or fails to act upon within 90 days from the date of receipt of a written, bona fide and firm offer of fair consideration for the property received at any time after six months following foreclosure or its equivalent. That six-month period shall begin to run from the date that the lender acquires marketable title, if the lender, after the expiration of any redemption or other waiting period provided by law, has acted diligently to acquire marketable title. If the lender has failed to act diligently to acquire marketable title, the six-month period shall begin to run on the date of foreclosure or its equivalent.
(3)
“Written, bona fide and firm offer” means a legally enforceable, commercially
reasonable, cash offer solely for the property, including all material terms of the transaction, from a ready, willing, and able purchaser who demonstrates to the lender’s satisfaction the ability to perform.
References
referencesCal. Health and Safety Code - HSC § 25548.2.
referencesCal. Health and Safety Code - HSC § 107.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026