Should California property owners face the prospect of a foreclosure, there are two main paths that the process may take legally: a non-judicial and judicial foreclosure. Understanding the process, expectations, and differences between both foreclosure styles is vital for helping owners and lenders know what will occur should they face a foreclosure situation.
California Non-Judicial Foreclosures
As the most common type of foreclosure process in California, non-judicial foreclosures follow a “power-of-sale” clause process through a mortgage loan or trust deed. This non-judicial foreclosure process allows for the lender to take control of the property and sell it to cover any outstanding balances involved. With a non-judicial foreclosure, a lender is not required to involve a court proceeding in the process – as long as the lender has ample documentation and proof to show that the borrower has failed to follow through on their payments on the mortgage loan.
In a non-judicial foreclosure, a lender will commonly send the borrower a Notice of Default. This notice allows for a 90 day period by which the borrower can remedy their default status. Should they not pay or come to terms with the lender, a Notice of Trustee’s Sale is activated. This 21-day process ends with the property going to sale at auction. The borrower will ultimately have up to five days before the auction to come to terms with the lender before they forfeit the property.
In a non-judicial foreclosure, the process is often completed much faster without having to involve the court system. The borrower will have no right of redemption by which to purchase the home following the sale.
California Judicial Foreclosures
The other means by which a foreclosure can occur is through a Judicial Foreclosure. In California, a judicial foreclosure is less-common due to the costs and time involved in involving the court system.
Should a lender not have a power-of-sale clause written into the loan or contract, they may be forced to involve a court in activating and completing a foreclosure. California courts have put in place many codes to protect borrowers from foreclosure harassment or fraud, so lenders must tread carefully should they move toward a judicial foreclosure.
Typically, a judicial foreclosure will require a hearing following a period of failure to pay on a mortgage note. Should the lender win the hearing, the court will determine the sale of the property at auction. Lenders may choose to bring a deficiency judgement against the borrower, but the borrower may also choose to take advantage of their right of redemption within a year following the sale of the property.
Partner With Legal Representation For Foreclosures
In foreclosure situations, it is vital that borrowers and lenders both understand their legal standing in the situation. Depending on the mortgage or deed of trust, there may be legal recourse necessary to ensure that a foreclosure occurs successfully without infringing on the rights of a borrower.
The Law Offices of R. Grace Rodriguez, are experienced in working with lender clients across Los Angeles, Ventura and Orange counties, and the San Fernando Valley. To learn more about the specific process involved with both judicial and non-judicial foreclosures, contact our team today to set up an appointment.
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