Western Banker July/August 2022

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The measure also applies retroac tively to existing contracts. Stan dard uniform instruments establish a power of sale but do not contemplate the approach envisioned by the bill. Ultimately, applying the bill retroac tively may raise legal arguments per taining to impairment of contract. Setting aside whether the approach taken in SB 1323 is legal, the mea sure prompts a number of very ba sic questions, such as how a trustee would escape criticism from the borrower who would ordinarily be in control of the sale of their own property. For example, how does the trustee select a real estate agent and was it the right one, pick from competing purchase offers, show the property to prospective purchasers if the borrower isn’t cooperative, or make representations as to the con dition of the property? Proponents think they have solved these concerns through recent amendments. One amendment es

Under this established relationship, the real estate agent’s client is the trustee, not the borrower. The legality of a trustee hiring a real estate agent to sell a home that the borrower still owns is questionable.

tablishes a process for the trustee to “randomly” select a real estate agent from a “statewide database” made available by the California Department of Real Estate (DRE), or if not available by the DRE, then from a database maintained by “a statewide trade association of real tors”. Another amendment dictates how a trustee picks between competing offers by establishing a waterfall test. First, the trustee must accept the highest value offer. However, if there are multiple offers at the same

amount, the trustee must pick the offer where the purchaser intends to occupy the property. If these factors are equal, the trustee must accept, in descending priority: • The offer with a waived in spection contingency; • The offer requiring the least third-party financing; and, • The offer with the soonest closing date. Interestingly, given the waterfall es tablished in the measure, it priori

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