California Foreclosure Law
Summary
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.
