Foreclosures

Judicial Foreclosures

Used for mortgage, uniform real estate contract, deed of trust (if elected), tax liens, mechanics liens, and judgment liens.

Proceed like any other lawsuit.

The lawsuit can take as little as two months or as long as several years.

If successful, the court:

1) Enters a judgment for the amount due with costs.

2) Orders the sale of property.

3) Directs the sheriff to proceed to sell the property.

The sale proceeds are paid to the foreclosing creditor to satisfy the judgment.

A deficiency judgment can be entered for any shortfall.

For a period of six months following the sale, the judgment debtor or any junior lien holder can redeem the property by paying the sale price plus six percent.

The person who is in possession of the property at the time of the sale is entitled to continue in possession during the redemption period but must pay rent.

Nonjudicial Trustee’s Sale

Used for deed of trust only.

Upon default the lender (beneficiary) instructs the trustee to exercise the power of sale.

The trustee records a notice of default in the county which the property is located.

Within ten days after recording, a copy of the notice of default must be mailed to the trustor and to each other person who has recorded a written request for notice (the customary practice is to give notice to everyone who holds a subordinate interest in the property).

Notice must be given to the trustor and to any person who has recorded a request for notice, and must also be posted in certain places and published in a newspaper having general circulation once a week for three consecutive weeks.

If the default is not cured within three months after recording the notice of default, the trustee can give notice of sale.

The trustee may then sell the property at public auction at the time and place provided in the notice of sale.

The trustee’s deed conveys the property to the purchaser without right of redemption (except possible IRS 120 day redemption).

At any time within three months after the sale, the lender can commence a judicial action to recover any deficiency (limited to the amount by which the total indebtedness exceeds the fair market value of the property on the date of the sale).