Frequently Asked Questions About California Foreclosures
Q: How are foreclosures conducted in California?
A: The most popular method of in California is
non-judicial foreclosure. This is not administrated by the court, but rather through contractual
obligations. Deeds of trusts usually have a provision called a power of
sale clause, which allows a trustee to sell a property if the borrower
has defaulted on the property loan. The trustee, acting as a representative
of the lender, may auction off the property. In California, unlike many
other states, title companies generally serve as trustees.
It may be processed through judicial procedures if no power of sale language
was included in the property’s loan documents.
Q: What is the “one-action rule?”
A: Under the one-action rule, a lender may not recover a deficiency judgment
if the foreclosure has been completed by non-judicial means. He or she
may recover a deficiency judgment if the foreclosure went through a judicial
process, but only in certain circumstances.
Q: What is the power of sale notice requirements?
A: A notice of default is usually not recorded unless the loan in question
has been in substantial default for a significant period of time (six
months or more) referred to as the redemption period. After the notice
is recorded, at least 60 days must pass before the process moves forward.
Then a notice of sale can be recorded. It must contain the name and address
of the trustee, certain disclosures that explain the circumstances of
the sale, the name of the beneficiary, and other relevant information.
It must be recorded in the county in which the property is located at
least 14 days before the sale is conducted.
Notice of the sale must be both mailed to the affected borrower and posted
at the property at least 20 days before the sale. If the borrower wishes
to prevent the process from beginning, he or she has the option of paying
all arrearages at least five days before the sale. If he or she is not
able to do so, then the trustee may go through with the sale as early
as 21 days after the first publication.
A sale must be conducted at the location referenced on the notice of sale
between 9 a.m. and 5 p.m. The borrower may postpone the sale, but only
for one day.
Q: Typically, how long does the foreclosure process in California take?
A:It generally takes no less than 120 days to process, and that’s the
estimate for uncontested non-judicial foreclosures. Procedures may be
elongated if the borrower pursues litigation, files for bankruptcy, or
seeks delays and adjournments of sales.
Q: What is the right of redemption?
A: In California, a party whose property has been foreclosed can reclaim
it by paying the full sum of the unpaid loan plus other costs one year
after the sale. However, if the foreclosed property was sold at full price
bid, then the original borrower has only up to three months to reclaim
the property.
