The defaulting borrower also has an opportunity to raise any defenses they may have without having to file their own court case.
In a judicial foreclosure, the foreclosure is processed through the court system, which means there will be judicial oversight of the process, additional costs involved, and sometimes a longer period of time to get the job done. If the stated deadline in the notice of default passes and the borrower has not cured the default, the lender can proceed with a court action to foreclose on the property (in a judicial foreclosure state) or their trustee can sell the property at auction (in the case of a deed of trust in a non-judicial foreclosure state). When this notice of default is issued, it effectively starts a time clock for the borrower to pay as agreed in order to avoid legal recourse from the lender. At the same time, this notice is also recorded as a public notice of the borrower's past due status. When a borrower misses their payments, the lender's first step is to issue a notice of default, so the borrower is fully aware that they need to make their payment if they want to keep their property. Non-judicial foreclosure is a process that allows the lender to foreclose on the property without involving the courts. Judicial Foreclosure and Non-Judicial Foreclosure: What's the Difference?
Some states were known as judicial foreclosure states, while others were known as non-judicial foreclosure states. One of the big differences I saw was what type of loan instrument I needed to use.Īnother big variation was how the foreclosure process worked. There was a whole new set of rules about what documents I needed to use and how the foreclosure process would work if my borrower defaulted on their payments. Years ago, when I started using owner financing to sell my properties, it took a lot of time for me to figure out how it all worked.Īfter navigating through my first few deals and asking a lot of questions of various attorneys and title companies in my area, I finally felt like I understood what I was doing (what documents I needed to use, what language should be included, what I needed to do if my borrowers stopped paying, etc).īut when I started doing deals in a new state, I was surprised to learn that many of the things I had learned in state #1 didn't apply in state #2.
0 kommentar(er)
