The homeowner falls anywhere from 30 to 90 days late on their payments. The lender makes several attempts to collect the debt and resolve the deficiency but the homeowner does not respond or cooperate.
The lender decides to foreclose and elects to foreclose with the Public Trustee on their Deed of Trust or through the courts judicially on their Promissory Note.
The lender hires an Attorney to prepare Mailing List and all documentation for presentation to the Public Trustee.
The Attorney sets a hearing for a Rule 120 Order that authorizes the Public Trustee to auction property if no cure occurs before the sale date.
The Public Trustee records a Notice of Election and Demand (NED) within 10 working days.
A determination is made by the Public Trustee whether the property is non-agricultural or agricultural within 10-20 days. This Public Trustee uses the legal description of property to make the determination.
A Sale Date is set from the NED recording date:
110-125 days for non-agricultural
215-230 days for agricultural property.
The NED and Combined Notice are sent to the owner, any guarantor on the note, and occupant only. The Public Trustee sends the NED and Combined Notice to all parties on the Mailing List 45-60 days prior to the sale date.
If the owner or guarantor wishes to cure, they must file a Notice for Intent to Cure 15 days or more prior to the sale date.
The Public Trustee publicly advertises the Sale Date five weeks prior to the Sale Date by publishing in local newspapers.
Sale Occurs & Redemption Begins
There is no owner redemption period.
The Sale occurs and a Certificate of Purchase is granted to highest bidder and recorded by the Public Trustee.
Any junior creditor with a recorded lien prior to the NED or with any involuntary lien such as a judgment, HOA lien, mechanic’s lien or IRS lien that records after the NED, can file a Notice of Intent to Redeem within 8 business days.
1st junior creditor has 5-19 business days to redeem.
2nd junior creditor or after has 5 business days to redeem.
Redemption must occur prior to12 noon on the last day of Redemption Period.
If a junior creditor is redeeming, they must obtain a Certificate of Redemption and the Public Trustee’s Deed.
If there is no redemption, the Public Trustee’s deed is granted to the holder (or assignee) of the Certificate of Purchase.
All other liens no longer affect property after the Public Trustee’s Deed except HOA, mechanic’s lien(s), municipality lien(s), taxes, omitted parties or senior lien(s).
Glossary of Foreclosure Terms
ASSIGNMENT OF DEED OF TRUST: A document that transfers the lender’s (beneficiary’s) interest in a deed of trust.
BANKRUPTCY: A legal process that allows a debtor to discharge certain debts without paying the total amount due.
BENEFICIARY: The lender or person to who the obligation is owed.
BIDDING INSTRUCTIONS: An authorization form signed by the beneficiary authorizing the trustee to make the initial opening bid at a trustee’s sale and subsequent bids.
DECLARATION OF DEFAULT: A document signed by the beneficiary instructing the trustee to prepare the Notice of Default should the borrower not bring the loan current, to sell the property, encumbered by the loan, in order to satisfy the unpaid debt. This document is not recorded.
DEED OF TRUST: A written document describing the real property being given as security for an obligation.
EXTENSION AGREEMENT: An agreement that extends the due date of a note.
FORECLOSURE: Enforcing a lender’s rights upon the default of an obligation that is secured by a deed of trust. A deed of trust must contain a power of sale clause to enable the trustee to initiate a non-juridical foreclosure.
FULL RECONVEYANCE: A document prepared by the trustee or substituted trustee, when the obligation secured by the deed of trust is paid in full. When recorded, the reconveyance takes the deed of trust off record.
NOTICE OF DEFAULT: A written document that is recorded, published, and posted giving notice of public record that a borrower has failed to perform his or her obligation under the terms of the promissory note. This document is recorded.
NOTICE OF TRUSTEE’S SALE: A document that is recorded, published, posted and mailed and sets forth the date, time and location of the trustee’s sale.
POSTPONEMENT: A verbal announcement made at the time and location of a trustee’s sale, extending the sale to a future date.
PUBLICATION PHASE: The period of time beginning after the third month starting on the date that the Notice of Default records. This period ends with the trustee’s sale being conducted. The trustee sees that the document is recorded, published and mailed in accordance with the requirements of the civil code.
RESCISSION OF NOTICE OF DEFAULT: After the default has been brought current or by the request of the beneficiary, this document when signed by the lender and recorded by the trustee, will remove the Notice of Default from record.
REINSTATEMENT PERIOD: The time period between the time that the Notice of Default records and ends 5 business days before the trustee’s sale. The lender must allow reinstatement during this period of time. A lender may elect to allow reinstatement after the 5-day period ends, but before the trustee’s sale.
SOLDIERS’ AND SAILORS’ RELIEF ACT OF 1940: An act passed by Congress for the financial protection of those individuals serving in the military service.
SUBSTITUTION OF TRUSTEE: A document signed by the lender and recorded by the trustee whereby the beneficiary appoints a successor trustee to the trustee of record.
TRUSTEE: The party who holds title to real property in trust for the benefit of another. The trustee’s most common functions are to process a full (when a loan is paid off) or partial (when a portion of the property is being release) reconveyance and to process a non-judicial foreclosure and process a trustee’s sale.
TRUSTOR: The borrower/owner at the time the deed of trust is created.
TRUSTEE’S DEED UPON SALE: A document signed and recorded by the trustee that transfers ownership of the real property to the purchaser at a trustee’s sale.
TRUSTEE’S SALE: A public auction sale of a property described in a Notice of Trustee’s Sale, which property was given as security for the repayment of an obligation.