California
Foreclosure Process
Judicial foreclosure
in California is rarely used, and only in the absence of a power
of sale clause in the loan document or when the lender is seeking
a court order for a deficiency judgment. The lender must sue the
borrower to obtain a decree of foreclosure and order of sale. The
court may also order that the borrower has up to one year to redeem
the property.
Non-judicial foreclosure
is the most common form of foreclosure in California. This process
is used when there is a power of sale clause authorizing the lender,
in the event of default, to sell the property to satisfy the loan
balance. If the power of sale clause includes the time, place and
terms of sale, then that procedure must be followed. If not, the
process is as follows:
A Notice of Default is
recorded with the county in which the property is located when a
borrower fails to make a loan payment. A copy of this Notice is
sent by certified mail to the borrower within 10 business days of
recording. The borrower has 90 days from the date of recordation
to cure the default.
If the borrower fails
to cure the default, a Notice of Sale is recorded. This Notice states
that the lender or trustee will sell the property at auction in
21 days. This Notice is also sent certified mail to the borrower.
It is also published weekly in a newspaper of general circulation
in the county for three consecutive weeks prior to the sale date.
The notice is also posted on the property, as well as in a public
place, usually at the county courthouse.
The Trustee Sale Auction
is held as a public auction at the time and place designated in
the Notice of Sale, and conducted by the lender's representative.
The successful bidder must pay immediately with cash or cashier's
checks in the full amount of the bid. The successful bidder receives
a trustee's deed on completion of the sale. The lender usually bids
in the amount of the balance due plus costs. If no one else bids,
the property reverts to the lender.
The borrower has no right
of redemption, and deficiency judgments may be pursued in non-judicial
foreclosure.
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