subject: Overview of the Types of Foreclosure in California [print this page] Overview of the Types of Foreclosure in California
Two types of foreclosure are practiced in California: Judicial foreclosure and Non-judicial foreclosure. With California being generally a consumer friendly state, the Non-judicial foreclosure is the most common type of foreclosure. Non-judicial foreclosure typically includes the use of a power of sale clause found in a trust deed.
Judicial foreclosure in California is rare to see and it requires the lender to sue the debtor (the owner of the property) in a court of law and proceed with a trial. An auction still happens in the foreclosure of the property, although appraisals and other items are still required. In a Judicial California foreclosure, the owner is given the right of redemption allowing the owner of the property to buy back the property from the auction winner one year after the auction.
Judicial foreclosure has a certain advantage to the lenders in that they may be able to obtain a deficiency judgment from the court against the borrower. This deficiency is the outstanding amount between the amount owed by the borrower (including costs, penalties and fees) and the amount the lender received at auction. Despite that advantage, the judicial foreclosure process is seldom applied in California real estate because the process is much more time consuming than non-judicial foreclosure. The Judicial foreclosure process is typically only used when there is no power of sale language in the loan documents.
In most cases of non-judicial foreclosure in California, the lenders give up their rights to collect a deficiency judgment against the borrower. Lenders simply prefer non-judicial foreclosure because of the minimal costs and expedited time frame. Non-judicial California foreclosure sales are typically postponed for at least once for various reasons, but they can be postponed up to a year based on specific postponement reasons. However, there is an expedited time frame of 111 days in California for non judicial foreclosures. In a non-judicial foreclosure, the borrower does not have the right of redemption after the auction.
