(a) In the event of a forfeiture of a contract of purchase under this article, the department may sell or otherwise dispose of the property covered by the forfeited contract to any person and upon any terms and conditions as it determines to be proper, under the conditions set forth in this section.

(b) The department shall give first preference to a veteran who qualifies under this article and who served during a time of war, second preference to any other person serving in or honorably discharged from the armed forces of the United States, third preference to any person who is a first-time home buyer, and fourth preference to any other person.

(c) Where the department elects in the event of a forfeiture to sell or otherwise dispose of an assignment of an Indian veteran’s beneficial interest or of a leasehold interest in allotment trust land, the department shall first offer it for sale to the person or persons for whom the land is held in trust, including an Indian veteran having a beneficial interest in the trust land on which the forfeiture occurred, at a price equal to the unpaid balance of the contract price. If none of the persons for whom the land is held in trust accepts the offer, the department shall next offer it to the United States Secretary of the Interior at the same price.

(d) Where the department elects in the event of forfeiture to sell or otherwise dispose of a leasehold interest in tribal trust land, the department shall first offer it for sale to the tribe for whom the land is held in trust at a price equal to the unpaid balance of the contract price. If the tribe fails to accept the offer, the department shall next offer it to the United States Secretary of the Interior at the same price.

(e) Where all the parties to whom the department is required to offer the property under subdivision (c) or (d) fail to accept the offer, the department may sell or otherwise dispose of the property covered by the forfeited contract as provided by subdivision (a) and, in so doing, the department shall give first preference to any good faith offer by a person approved by the tribal council of the reservation, rancheria, or land held under the jurisdiction of that particular tribal governing body on which the allotment land is sited.

(f) If the property is subject to a participation contract, the department may, at its option, pay the balance due upon the participation contract, including accrued interest, without penalty.

(g) Nothing in this section invalidates a transfer to, or affects the interest of, a good faith purchaser for value without notice of any failure of the department to comply with any requirement of this section in the disposition of any property subject to a forfeited contract.

(Amended by Stats. 1997, Ch. 156, Sec. 3. Effective January 1, 1998.)