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Judicial and Non-Judicial Foreclosures |
Each state in the U.S. handles it's real estate foreclosures differently, it's important to understand those differences and know your specific state's procedures. The terms used and timeframes vary greatly from state to state, but the following information provides a general overview of the different processes and considerations. If you haven't done so yet, you can review our guide to each state's procedures at foreclosure procedures.
Judicial foreclosures are processed through the courts, beginning with the lender filing a complaint and recording a notice of Lis Pendens. The complaint will state what the debt is, and why the default should allow the lender to foreclose and take the property given as security. The homeowner will be served notice of the complaint, either by mailing, direct service, or publication of the notice, and will have the opportunity to be heard before the court. If the court finds the debt valid, and in default, it will issue a judgment for the total amount owed, including the costs of the foreclosure process. After the judgment has been entered, a writ will be issued by the court authorizing a sheriff's sale. The sheriff's sale is an auction, open to anyone, and is held in a public place, which can range from in front of the courthouse steps, to in front of the property being auctioned. Sheriff's sales will require either cash to be paid at the time of sale, or a substantial deposit, with the balance paid from later that same day up to 30 days after the sale. Check your local procedures carefully. At the end of the auction, the highest bidder will be the owner of the property, subject to the court's confirmation of the sale. After the court has confirmed the sale, a sheriff's deed will be prepared and delivered to the highest bidder, when that deed is recorded, the highest bidder is the owner of the property.
Non-judicial foreclosures are processed without court intervention, with the
requirements for the foreclosure established by state statutes. When a loan default
occurs, the homeowner will be mailed a default letter, and in many states, a Notice of
Default will be recorded at approximately the same time. If the homeowner does not
cure the default, a Notice of Sale will be mailed to the homeowner, posted in public
places, recorded at the county recorder's office, and published in area legal
publications. After the legally required time period has expired, a public auction
will be held, with the highest bidder becoming the owner of the property, subject to their
receipt and recordation of the deed. Auctions of non-judicial foreclosures will
generally require cash, or cash equivalent either at the sale, or very shortly thereafter.
It is important to note that each non-judicial foreclosure state has different procedures.
Some do not require a Notice of Default, but start with a Notice of Sale.
Others require only the publication of the Notice of Sale to announce the sale, with no
direct owner notification required. You need to know the specific procedure for your
state.
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Judicial and Non-Judicial Foreclosures |
