California Foreclosure Law

he non-judicial foreclosure process is used instead of filing a lawsuit in court to satisfy the amounts owed to a lender with a secured loan under a Deed of Trust. The process follows procedure as set forth in the Civil Code of California. Based on the code, there are specific time frames and the costs are limited by law. This makes the non-judicial foreclosure the best economical method for a lender.

Notice of Default

Foreclosure proceedings start with a Notice of Default (NOD). The document is recorded at the request of the lender by the trustee and is recorded in the county in which the property is located. The recording of Notice of Default gives Constructive Notice to the public. After recording of the Notice of Default, in the state of California, the borrower and junior lien holders are given proper notification and the borrower has 90 days to bring their account current. This period is referred to as the Reinstatement Period.

Notice of Trustee Sale

If the borrower does not reinstate their account within the 90 day period, the lender will authorize and instruct the Trustee to record the Notice of Trustee Sale. (NOS) After 21 days of the recording of the NOS, a foreclosure sale can take place at public auction. The property may be sold to a third party bidder or may revert back to you, the lender. Bidders are required to bring cashier's checks or money orders to the sale in the amount equal to or higher than the lenders opening bid. The auctioneer will qualify each bidder and the successful bidder will have to tender full payment at the sale. The Notice of Trustee's Sale is recorded at the County Recorder's office in the County where the property is located. It contains the date, time, and place where the auction will take place. This notice has to be published in an adjudicated newspaper in the city where the property is located. The NOS is also posted on the property as a requirement of law. The sale can be held anywhere in the county in which the property is located, generally at the Courthouse or a Post Office, or another public building.

Disbursement of Funds

After the sale auction is completed and if the property sells to an outside third party bidder, all funds owed to the lender/beneficiary will be prepared for immediate payout. If the property reverts to the lender/beneficiary at the sale, a Trustees Deed Upon Sale will be issued and the lender will have ownership to the property securing the debt.