California Foreclosure Laws

Foreclosure Laws in California

Judicial Foreclosure: Yes
Non-Judicial Foreclosure: Yes
Security Instruments: Trust Deed
Right of Redemption: Judicial Only. 12 Months
Deficiency Judgments: Judicial Foreclosure Only
Time Frame: 4-7 Months
Public Notice: Notice of Default

Judicial foreclosure: In California is rarely used, and only in the absence of a power of sale clause in the loan document or when the lender is seeking a court order for a deficiency judgment. The lender must sue the borrower to obtain a decree of foreclosure and order of sale. The court may also order that the borrower has up to one year to redeem the property.

Non-judicial foreclosure: The most common form of foreclosure in California. This process is used when there is a power of sale clause authorizing the lender, in the event of default, to sell the property to satisfy the loan balance. If the power of sale clause includes the time, place and terms of sale, then that procedure must be followed. If not, the process is as follows:

A mortgagee, trustee, must wait 30 days after contact is made with the borrower, or 30 days after satisfying due diligence requirements to contact the borrower, as specified, before filing a notice of default.

The mortgagee or authorized agent to advise the borrower that he or she has the right to request a subsequent meeting within 14 days, and to provide the borrower the toll-free telephone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency.

The notice of default to include a specified declaration from the mortgagee, beneficiary, or authorized agent regarding its contact with the borrower or that the borrower has surrendered the property. If a notice of default had already been filed prior to the enactment of this act, the bill would instead require the mortgagee, trustee, beneficiary, or authorized agent, as part of the notice of sale, to include a specified declaration regarding contact with the borrower. The bill would authorize a borrower to designate a HUD-certified housing counseling agency, attorney, or other advisor to discuss with the mortgagee, beneficiary, or authorized agent, on the borrower’s behalf, options for the borrower to avoid foreclosure.

A legal owner to maintain vacant residential property purchased at a foreclosure sale, or acquired by that owner through foreclosure under a mortgage or deed of trust. The bill would authorize a governmental entity to impose civil fines and penalties for failure to maintain that property of up to $1,000 per day for a violation.

Notice of Default: Recorded with the county in which the property is located when a borrower fails to make a loan payment. A copy of this Notice is sent by certified mail to the borrower within 10 business days of recording. The borrower has 90 days from the date of recordation to cure the default.

If the borrower fails to cure the default: A Notice of Sale is recorded. This Notice states that the lender or trustee will sell the property at auction in 21 days. This Notice is also sent certified mail to the borrower. It is also published weekly in a newspaper of general circulation in the county for three consecutive weeks prior to the sale date. The notice is also posted on the property, as well as in a public place, usually at the county courthouse.

The Trustee Sale Auction: Held as a public auction at the time and place designated in the Notice of Sale, and conducted by the lender's representative. The successful bidder must pay immediately with cash or cashier's checks in the full amount of the bid. The successful bidder receives a trustee's deed on completion of the sale. The lender usually bids in the amount of the balance due plus costs. If no one else bids, the property reverts to the lender.

The borrower has no right of redemption, and deficiency judgments may be pursued in non-judicial foreclosure.

Laws: