San Diego Foreclosure Attorney
As a real estate foreclosure attorney, I have 20 years experience dealing with Real Estate secured loans and foreclosure issues. A good portion of my law practice involves representing real estate investors resolve legal problems arising from purchase and sale transactions. A noncomprehensive list of legal problems include: Lien priority problems; third party claims; borrower breach of contract; buyer breach of contract, seller breach of contract; fraud and deceit; marketability of title; third-party interference with contract as well as bankruptcy issues incident to a real estate transaction.
As to the topic of foreclosure, in California there are two ways to foreclose, judicially and nonjudicially. What follows below is a brief overview of the foreclosure process, the services we provide having to do with foreclosure, some types of legal issues encountered with a foreclosure, and some legal problems incident thereto as well as legal problems post-foreclosure sale.
Nonjudicial foreclosure is a foreclosure that takes place out of court. It is the exercise of a power of sale in a mortgage or deed of trust by the mortgagee or trustee after a breach of the obligation secured by the mortgage or deed of trust. This power of sale may only be exercised when the mortgage, trustee, beneficiary, or authorized agent of any of the above has first recorded a notice of default with the county recorder where the subject property is located. At any time after the notice of default is recorded until five business days before the date of the sale, the mortgagor, trustor, or any subordinate lienholder may cure the default and reinstate the loan by paying the amount that is then due under the secured obligation, including specified costs and fees. Three months after the notice of default is recorded, the mortgagee or trustee (or other person authorized to take the sale) must give at least 20 days’ notice of the sale of the secured property if the default has not been cured. At the expiration of this notice period, the mortgagee or trustee may sell the secured property, at public auction, to satisfy the delinquent obligation in accordance with statutory requirements.
Conversely, a judicial foreclosure involves a lawsuit filed in a court of law. An action for judicial foreclosure is authorized by California Code of Civil Procedure §725a. A beneficiary or trustee named in a deed of trust or a mortgagee has the right to bring an action to foreclose the deed of trust or mortgage. There can be but one form of action for the recovery of a debt or the enforcement of any right secured by real property, which is an action for judicial foreclosure under §725a.
The creditor faced with a default on a loan secured by real property has a choice of remedies: judicial foreclosure or nonjudicial foreclosure by exercising the power of sale. Nonjudicial foreclosure will generally be faster and less expensive because a legal action is not necessary. Moreover, it is not necessary to hire a lawyer for a nonjudicial foreclosure. For this reason nonjudicial foreclosures tend to be a lot less expensive. The disadvantage to nonjudicial foreclosure is that a deficiency judgment is not available. A judicial foreclosure permits a deficiency judgment, but the debtor will have a right to redeem from the sale.
Issues with Foreclosure
Naturally, legal issues will arise from foreclosure. If the owners of the property occupy the property following the foreclosure then it may be necessary to evict them through an unlawful detainer proceeding. Where there are multiple loans encumbering a property then competing lien claims can arise from the hierarchy of the liens in question. A borrower intentionally harming the property and committing waste to the property. Bankruptcy. Fraud and deceit.
In the main, relative to a nonjudicial foreclosure, a judicial foreclosure is an unattractive alternative. There are circumstances where a judicial foreclosure may become desirable. Most notably, in situations where the balance on the loan is greater than the value of the property. The difference is called a deficiency. Stated another way, a deficiency lies where a foreclosure sale produces sales proceeds in an amount insufficient to pay off the loan). Otherwise, a lender should take a hard look at a nonjudicial foreclosure. We provide services relative to judicial foreclosures. However, given a lawyer is not necessary to perform a nonjudicial foreclosure and there are nonlawyer companies that provide this service for much less than what a lawyer typically charges we encourage lenders to take a hard look a one of these companies offering nonjudicial foreclosure services. Alternatively, if there are other legal problems confronting a lender making a judicial foreclosure an attractive alternative then please give us a call.
If you are in need of a real estate foreclosure attorney or any other legal services related to other real estate matters, contact Jon Alan Enochs for a consultation over the phone today.