49 Tips

California Foreclosure Laws

Submitted By: Mojo Nichols in Real Estate Tips category

auto tips Foreclosure refers to the legal proceedings in which a lender gets a legal termination order from the court for the right of redemption of the mortgagor, in the property mortgaged. The lender may sell the property off post the court proceedings and use the money to pay off the mortgage and the cost of legal proceedings. If the amount recovered from the sale is lesser than the balance of principle and cost of legal proceedings, then the lender may file a claim for a deficiency judgment. Here are the solutions for the few basic questions related to California foreclosure laws.

How is the property mortgage liens tackled with in California?

Answer – In California the title theory operates. The title of the property remains under control until the full payment is made for the loan. It is legally referred to as the “deed of trust,” but it can also be called “mortgage,” California is generally a consumer friendly state. It has complicated rules for foreclosure.

How are mortgages foreclosed in California?

Answer – Mortgages are foreclosed in California through –

Non-judicial foreclosure – It does not involve court action. In case of the signing of the deed of trust, there is a provision in it called the power of sale clause. This clause says that a trustee may sell off the property in case of a default of the underlying loan. The sale is typically in the form of an auction where the trustee acts as a representative of the lender. In California the trustee is not appointed by the lender the title companies act as a trustee for sale. If the foreclosure takes place through this method there is no second action for recovering deficiency judgment. There is a requirement of one-action rule in California.

What all legal documents are used for establishing a California mortgage?

Answer - The legal instruments used are –

Deed of trust.
Note – has the terms of repayment.
Security agreement in a commercial transaction.
Mortgage – An evidence of the underlying loan.

What is the time period for a foreclosure in California?

Answer – The time period of a foreclosure depends on the timing of notices. It takes minimum of 120 days for a non- judicial foreclosure to get into effect. In case the borrower files for a bankruptcy, or seeks adjournments the foreclosure may get delayed.

Does California have a right of redemption?

Answer – There is a statutory right of redemption in California. This is slightly complicated. This allows the party to reclaim their property by paying the full amount. The full amount or sum consists of the sum borrowed plus the costs. Even after the foreclosure sale. The 90 days post the notice of default which the borrower has to pay off the sum is called the redemption period. Though, this is not the true statutory redemption.

These are a few of the common questions regarding the foreclosure clauses and law in California. The California foreclosure law is slightly ambiguous yet is consumer friendly.

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