How Long Does the Foreclosure Process Take in California

Step 3. The Foreclosure Auction

Notice of Sale

If the borrower does not balance out the outstanding loan payments, the lender may record a notice of sale – but no sooner than 90 days after the notice of default was recorded. The notice of sale must be sent to the delinquent borrower via certified mail and will contain the time and date of the upcoming foreclosure auction, the property's full address, the name, address and phone number of the trustee, as well as a statement that the property in question will be sold via public auction. The notice of sale must also be posted on the affected property, and in a public place – this will usually be the county courthouse. The notice must also be shared in a general circulation newspaper at least once a week for three consecutive weeks before the sale is scheduled to take place.

According to California foreclosure law, the borrower may still balance out the default up to 5 days before the foreclosure sale is set to take place, thus reinstating the loan. Moreover, during the 21-day period while the notice of sale is in circulation, the affected property may be redeemed by an entity or person interested in it by paying the full loan amount.

Trustee's sale

Foreclosure auctions are usually held at the County Courthouse of the county the delinquent property is located in. Most often they take place on business days, during typical business hours – from 9 A.M. to 5 P.M. However, the foreclosure auction can be moved to another location and time by the foreclosure trustee. Anyone can bid on a foreclosed property, but interested buyers cannot view the property beforehand. Potential buyers should also make sure they have readily available financing for their intended purchase.

Rules and regulations wary somewhat from county to county in California, so extensive research is necessary by a potential buyer to be certain of compliance with local county laws. For example, some counties may require bidders to bring their bids in cash or cashier's checks to the auction, while others will enforce a sealed-envelope bid rule. In the case of non-judicial foreclosure – the most common type in California – all sales are final. Successful foreclosure buyers also assume outstanding liens against the property such as tax liens.

The one action rule and delinquency judgements

Due to California's status as a "one-action" state, lenders can choose only one method to recoup losses incurred by defaulted loans. This means that if the sale price of a property at the foreclosure auction is below the outstanding loan balance, the lender has no legal recourse to sue the borrower for the remaining balance of the defaulted loan.

To avoid incurring such losses, most lenders will also bid on foreclosed properties, offering a price equal to the outstanding balance plus foreclosure costs. Such a move provides the most advantages for a lender – on one hand an interested buyer will have to outbid the lender's offer, ensuring a price higher than the outstanding balance and foreclosure costs. On the other hand, if no buyers come forward with a higher offer, or no offer is made at all, the property will revert to the ownership of the lender and become real estate owned or REO. The lender can then proceed to list the property on the free market for a price of their choosing – although barring the lender being in possession of a large inventory of REO properties, these real estate assets will usually be listed at market value, or just below that.

Right of redemption

In the case of judicial foreclosures, California law allows the lender to get a deficiency judgement against the delinquent borrower – however, the process also gives the delinquent borrower the "right of redemption". Under California state law, this means the delinquent borrower has the right to buy back foreclosed property from the successful bidder up to one year after the foreclosure sale. To successfully redeem a property, a former owner who lost it via foreclosure must pay the foreclosure sale plus interest, as well as all additional expenses the lender incurred.

According to California foreclosure laws, the timeframe allotted for redemption depends on whether or not a delinquency was recorded at the foreclosure sale. If a delinquency wasn't recorded, i.e. the foreclosed property sold for a price equal to or higher than the outstanding loan balance, the borrower has up to three months to regain ownership of the property after paying all legally required amounts and fees. If a delinquency was recorded, the redemption period jumps to one year. However, this avenue is not open to borrowers whose properties have been sold through non-judicial foreclosures.

In the case of properties purchased through foreclosure auctions following a judicial foreclosure, the new owner does not have full ownership of the property until the redemption period expires. In fact, if the delinquent borrower successfully follows through on all redemption requirements in the legal time limit, the new owner's ownership rights will be waived in favor of the previous owner.

Get one comprehensive property report for free and preview how our tools can make your work easier.

How Long Does the Foreclosure Process Take in California

Source: https://www.propertyshark.com/info/foreclosure-process-california/

Share this post