Disclaimer: The following are not intended to give legal advise, but are general summaries of the law and procedure for information purposes only and are subject to revision without notice. Each and every situation is unique and you should not rely on the following, but seek a legal counsel regarding your individual situation.
Non-Judicial Foreclosure is a process in which a lender who holds a security interest lien against a property can take legal title to that property without going to court. The entire process is governed by California Statute and is very technical. The following is a summary of this process.
Notice of Default
After several months of non-payment of mortgage, a secured lender initiates the non-judicial foreclosure process by recording a Notice of Default at the County Recorders office for the County where the property is situated in. A property owner will receive additional notice of this filing by regular and certified mail. From the date of recording, the property owner has 90 days to pay and reinstate/cure the delinquent amount. During this period, if there is sufficient equity in the property, the owner may sell the property. However, in many cases, the existing loans are more than the value of the property, and the owner is unable to sell the property without putting money into the deal. Some lenders initiate the foreclosure process after just two two missed payments, while others wait as long as one year. (See Q & A→).
Notice of Trustee’s Sale
After 90 days have elapsed from the date of filing of a Notice of Default, the lender may schedule the property for a Trustee’s Sale (foreclosure auction) by filing a notice of Trustee’s Sale. The notice of Trustee’s Sale is published at least 21 days prior to the date of sale, and is filed at the county recorders office at least 14 days prior to the date of the sale.
In the event the loan is not reinstated five days prior to the auction date contained in the Notice ofTrustee’s Sale, the property will likely be sold by Foreclosure Auction at the Trustee’s Sale.
At the Trustee’s Sale, the property will be sold by auction, and either the successful bidder or the Lender, if there are no outside bidder’s, will receive a Trustee’s Deed, and become the legal owner of the property. The senior liens will remain in place, but most non-tax junior liens will be wiped out. Any remaining proceeds, if any, will be distributed in according to the prior lien position.
Once the title to the property changes, the new record owner may evict the current occupants of the property by first delivering the appropriate notice to vacate, followed by a complaint for an unlawful detainer.