Consumer protection · California AB 295
California restricts early foreclosure-surplus solicitation.
California Civil Code section 2924.21 generally prohibits a person from contacting, soliciting, or initiating communication with an owner to claim surplus funds from the foreclosure of the owner's residence until 90 days after the trustee's deed is recorded.
The rule
What AB 295 changed.
AB 295 was signed on July 18, 2024 as urgency legislation and took effect immediately. The law added Civil Code section 2924.21, creating a cooling-off period before third parties may initiate contact with a former owner about claiming residential foreclosure surplus funds.
Step 1
Trustee sale occurs
A foreclosure auction may produce funds beyond the amounts needed to pay the foreclosing lien and other claims.
Step 2
Trustee's deed is recorded
The statutory 90-day period is tied to the recording date—not simply the auction date.
Step 3
90 days elapse
Before this point, a person generally may not initiate communication with the owner to claim the surplus.
Important: The restriction governs who may initiate contact and when. It does not suspend an owner's ability to seek information or legal advice, decide who is entitled to funds, or replace California's claim-and-distribution procedures under Civil Code sections 2924j and 2924k.
Why the waiting period matters
Public records can trigger fast, high-pressure outreach.
Foreclosure information is often publicly available. That can bring calls, letters, texts, and doorstep solicitations before a former owner has had time to confirm whether surplus exists, where the funds are held, or what rights a proposed agreement would transfer. California's waiting period is intended to give owners breathing room before responding to unsolicited recovery offers.
AB 295 is not a guarantee of recovery.
Whether funds exist—and who may receive them—can depend on the sale accounting, junior liens, probate or trust issues, bankruptcy, assignments, judgments, and competing claims. A 90-day deadline in a solicitation rule should not be confused with a deadline for filing a claim.
Warning signs
Slow down when an offer asks for trust before verification.
Unsolicited contact soon after the sale
Confirm the trustee's deed recording date and consider whether the outreach may violate the 90-day rule.
Pressure, secrecy, or artificial urgency
Be cautious of claims that you must sign immediately, cannot consult anyone, or will automatically lose the money within days.
Broad transfers of legal rights
Read any assignment, power of attorney, deed, lien, or authorization carefully. Never sign blank or incomplete documents.
Fees that are hard to understand
Ask for the total fee in dollars and percentage terms, what work is included, who pays costs, and when payment is due.
Requests for sensitive information
Verify the person and organization before sending identification, tax forms, bank details, probate papers, or payment.
Claims of government affiliation
Independently confirm any statement that the caller works with a court, county, trustee, regulator, or law-enforcement agency.
The law behind these warning signs
The safest rule: work only with a licensed attorney.
Every warning sign above is a symptom of the same underlying fact: the company is not a licensed attorney, and California's Mortgage Foreclosure Consultants Act (Civil Code §2945.1 et seq.) exists specifically to regulate — and limit — what a non-attorney "foreclosure consultant" may do. The Act exempts only one kind of provider: a licensed attorney acting in the practice of law. Every paid surplus-recovery company that isn't a law firm is a foreclosure consultant under this statute, whether or not it says so.
No bond or DOJ registration on file
A foreclosure consultant must register with the California Department of Justice and post a $100,000 surety bond before doing business. Ask to see it — operating without one is a crime.
Fees collected before work is done
A consultant cannot collect any compensation, take a lien, take an assignment of your claim, or take a power of attorney until every promised service has been fully performed.
No mention of your cancellation right
California law gives you five business days to cancel a foreclosure-consultant contract for any reason. A legitimate provider will tell you this upfront.
No professional accountability
An attorney answers to the State Bar of California and carries fiduciary duties of loyalty, competence, and confidentiality. A consultant carries none of those obligations by default.
Violating the Act exposes a company to actual damages, your attorney's fees, and at least three times the compensation it collected — plus separate criminal penalties. That liability exists because the law treats this conduct as serious, not because a warning sign was worded strongly.
Read the Mortgage Foreclosure Consultants Act (Civil Code §2945.1) ↗
Before signing
Verify the record, the claimant, and the agreement.
Confirm the funds
Identify the trustee or court, request the sale accounting, and confirm whether funds have been deposited or distributed.
Confirm entitlement
Review title, liens, estate documents, judgments, assignments, and every potentially competing claim.
Confirm the professional
Verify a lawyer through the State Bar of California and check the actual organization, address, and contact information.
Confirm the deal
Understand the fee, scope, cancellation terms, dispute terms, and every right or authority the document grants.
Legal help versus a recovery service
The label matters less than the obligations.
A California lawyer must comply with professional duties that can include competence, loyalty, confidentiality, conflict rules, fee requirements, and discipline by the State Bar. A nonlawyer recovery company cannot provide legal advice or represent a person in court merely because it locates public records or offers claim assistance. Before hiring anyone, verify who will perform the work, whether legal representation is included, and what happens if the claim becomes contested.
If you already signed
Preserve documents and get the agreement reviewed promptly.
Keep the contract, envelopes, emails, texts, call records, advertisements, payment instructions, and every document you signed. Do not ignore trustee, court, county, or bankruptcy notices. An attorney can assess whether the agreement is enforceable, whether rights were assigned, and what immediate steps may still be available. Suspected fraud can also be reported to the appropriate law-enforcement or consumer-protection agency.
Independent consumer resources
California Attorney General: foreclosure rescue scams ↗
California DFPI: asset-recovery scam warning ↗
A careful first step
Ask questions before transferring rights.
Equity Recovery Law Group can review the available records, explain the California process, and identify issues that may affect a potential claim.
This page provides general information, not legal advice. Laws and facts can change, and viewing this page does not create an attorney-client relationship.