Quick Facts
- Judicial Foreclosure Available:
Yes
- Non-Judicial Foreclosure Available:
Yes
- Primary Security Instruments: Deed of
Trust, Mortgage
- Timeline: Typically 120 days
- Right of Redemption: Varies
- Deficiency Judgments Allowed: Varies
In California, lenders may foreclose on deeds of
trusts or mortgages in default using either a judicial or non-judicial foreclosure
process.
Judicial Foreclosure
The judicial process of foreclosure, which involves
filing a lawsuit to obtain a court order to foreclose, is used when no power of
sale is present in the mortgage or deed of trust. Generally, after the court declares
a foreclosure, your home will be auctioned off to the highest bidder.
Using this type of foreclosure process, lenders may
seek a deficiency judgment and under certain circumstances, the borrower may have
up to one (1) year to redeem the property.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when
a power of sale clause exists in a mortgage or deed of trust. A "power of sale"
clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes
the sale of property to pay off the balance on a loan in the event of the their
default. In deeds of trust or mortgages where a power of sale exists, the power
given to the lender to sell the property may be executed by the lender or their
representative, typically referred to as the trustee. Regulations for this type
of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power
of sale clause and specifies the time, place and terms of sale, then the specified
procedure must be followed. Otherwise, the non-judicial power of sale foreclosure
is carried out as follows:
A notice of sale must be: 1) recorded in the county
where the property is located at least fourteen (14) days prior to the sale; 2)
mailed by certified, return receipt requested, to the borrower at least twenty (20)
days before the sale; 3) posted on the property itself at least twenty (20) days
before the sale; and 4) posted in one (1) public place in the county where the property
is to be sold.
The notice of sale must contain the time and location
of the foreclosure sale, as well as the property address, the trustee's name, address
and phone number and a statement that the property will be sold at auction.
The borrower has up until five days before the foreclosure
sale to cure the default and stop the process.
The sale may be held on any business day between
the hours of 9:00 am and 5:00 pm and must take place at the location specified in
the notice of sale. The trustee may require proof of the bidders ability to pay
their full bid amount. Anyone may bid at the sale, which must be made at public
auction to the highest bidder. If necessary, the sale may be postponed by announcement
at the time and location of the original foreclosure sale.
Lenders may not seek a deficiency judgment after
a non-judicial foreclosure sale and the borrower has no rights of redemption.
More information on California foreclosure laws.
