California Foreclosure Laws

Foreclosure Laws in California

While California allows both judicial and non-judicial foreclosures, non-judicial foreclosures are far more common due to the common presence of Power of Sale clauses in mortgages, which allow lender to pursue foreclosures themselves. Generally, the average non-judicial foreclosure takes about four months to complete.

Judicial proceedings are usually only sought by lenders if they wish to be able to file for a deficiency judgment. This will allow them to seek the remaining debt amount from the homeowner if the sale price of the property at foreclosure auction does not satisfy the full debt amount. Judicial foreclosures allow the homeowner up to one year to redeem ownership of their property by providing the full amount owed on the loan in addition to any additional costs or interest.

In the much more common case of non-judicial foreclosures, the process begins when the lender registers a notice of default with the county clerk and outlines a timeline in which the homeowner has to settle the debt to avoid a foreclosure. The lender must also provide the notice of default to the homeowner. If the default debt is not settled, the lender can schedule a foreclosure sale of the property for at least three months after the original notice of default was filed.

The original homeowner has up until 5 days prior to the date of the sale to pay off the debt owed and avoid a foreclosure.

Before a sale can occur, the lender must arrange to have a Notice of Sale posted on the property in question and in one other public location for no less than 20 days before the sale takes place. The Notice of Sale must also be published in a local newspaper once a week for three consecutive weeks leading up to the date of the sale. This Notice must include the time, date and location of the sale, as well as the trustee's contact information. The lender must also file the Notice of Sale with the county recorder at least 14 days before the sale.

The sale is conducted as a public auction at which anyone may bid, and the property is awarded to the highest bidder. The trustee can require bidders to present the entire winning amount by cash or cashier's check, but it is up to their discretion. The sale can be postponed by announcement at the sale site, but if it is postponed more than 3 times, a new sale must be scheduled and the process must begin again from the start.

Ownership is transferred to the winning bidder as soon as payment is procured. The original homeowner retains no right to redemption.