California Foreclosure Laws
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In California, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process. Judicial Foreclosure Judicial Foreclosure involves the sale of the mortgaged property under the supervision of a court. The property is subject to auction by the county sheriff or some other officer of the court. The proceeds first go to the lender to satisfy the mortgage; then other lien holders; and, finally, to the borrower if any proceeds are left. All parties must be notified of the foreclosure. A judicial decision is announced after pleadings at a hearing in a state or local court. Non-Judicial Foreclosure (Power of Sale) Also known as Foreclosure by power of sale, Non-Judicial Foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. This process involves the sale of the property by the mortgage holder without court supervision. It is generally more expedient than foreclosure by judicial sale. As in judicial sale, the mortgage holder and other lien holders are respectively first and second claimants to the proceeds from the sale. 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.
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