In California, lenders who intend to foreclose on a property when the
loan is delinquent typically use the nonjudicial foreclosure process
also known as a trustee’s sale. This process is less expensive for the
lender than the judicial foreclosure process. A nonjudicial foreclosure
doesn’t require a court proceeding and, thus, is a more expeditious
process. From here on, whenever the term “foreclosure” is used, it is
referring to a trustee’s sale.
With foreclosures being so prevalent and with so many homeowners being
at risk of losing their homes to foreclosure, REALTORS® need to be able
to assess whether they have sufficient time to market the property and
close escrow before the property is lost to foreclosure. Therefore,
this article provides a foreclosure timeline to assist REALTORS® in
their assessment of the time remaining before a possible foreclosure
occurs.
Several recent laws have impacted the foreclosure timeline. The
California legislature added an additional 90-day extension period after
the recordation of the Notice of Default (NOD)—California Civil Code
Sections 2923.52-2923.55. However, those statutes were repealed
effective Jan. 1, 2011.
Another law which expires Jan. 1, 2013—California Civil Code Section
2923.5--affects the foreclosure timeline but only for loans made between
Jan. 1, 2003 and Dec. 31, 2007 on residential one-to-four unit
owner-occupied properties. This law adds a 30-day borrower contact
period before the lender may record the NOD.
In the counting of days in the chart below, please consider that if the
final day of performance falls on a Saturday, Sunday, or holiday, then
the day for performance becomes the next business day. “Business days”
are defined as all days
other than Saturday, Sunday, and holidays. See California Civil Code Sections 7.1, 9, and 10 for more details.
FORECLOSURE TIMELINE FOR LENDERS
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Loans Made Between Jan. 1, 2003 and Dec. 31. 2007 on Residential One-to-Four Unit Owner-Occupied Properties
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Other Loans
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DAY 1: CONTACT THE BORROWER
Under Cal. Civ. Code § 2923.5(a) the lender must contact the borrower by
phone or in person to assess the borrower’s financial situation and
explore options for avoiding foreclosure. During the conversation, the
lender must inform the borrower of the right to meet with the lender
within 14 days. The lender must also give the borrower the toll-free
number for finding a HUD-certified housing counseling agency.
Note: In the 2010 case, Mabry v. Aurora Loan,
the court held that a borrower can file an injunction to postpone the
foreclosure sale if the lender doesn’t comply with this law, but cannot
overturn the foreclosure sale once it has been conducted.
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DAY 31: RECORD THE NOD
The NOD must be filed in the county where the property is located. The
language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).
The NOD must include the lender’s declaration that it has contacted the
borrower to explore options for avoiding foreclosure, tried with due
diligence to contact the borrower, or the borrower has surrendered the
property (Cal. Civ. Code § 2923.5(b)).
Within 10 days after recordation of the NOD: A
copy of the NOD must be mailed by registered or certified mail to the
borrower/trustor and to any parties with a recorded Request for Notice
as indicated in Cal. Civ. Code § 2924(b)(1). (Cal. Civ. Code §
2924b(b).)
Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3).
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DAY 1: RECORD THE NOD
The NOD must be filed in the county where the property is located. The
language of the NOD can be found in Cal. Civ. Code § 2924c(b)(1).
Within 10 days after recordation of the NOD:
A copy of the NOD must be mailed by registered or certified mail to the
borrower/trustor and to any parties with a recorded Request for Notice
as indicated in Cal. Civ. Code § 2924(b)(1). (Cal. Civ. Code §
2924b(b).)
Within 30 days after recordation of the NOD: the lender must mail a statutory notice to the borrower as described in Cal. Civ. Code 2924f(c)(3).
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DAY 116 – 121: RECORD THE NOTICE OF TRUSTEE’S SALE
The Notice of Trustee’s Sale must set forth the date, time, and place of
the Sale. It must also include the total amount of the unpaid balance
and reasonably estimated costs, expenses, and advances at the time of
the initial publication of the Notice. It must be recorded, posted,
published, and also mailed by registered or certified mail as well as
first class mail to the borrower (Cal. Civ. Code § 2924f).
25 days prior to Trustee’s Sale:
Notice of Sale sent to IRS in case there is an IRS lien recorded more
than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4);
26 U.S.C. 7425(b)).
20 days prior to Trustee’s Sale: Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).
20 days prior to Trustee’s Sale:
Notice of Sale publication begins (must run once a week for 3
consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code
§ 2924f(b)).
20 days prior to Trustee’s Sale:
Notice of Sale must be mailed by registered or certified mail to
everyone who is entitled to receive a NOD. In addition, the Notice of
Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ.
Code § 2924b(b)-(c)).
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DAY 86 - 91: RECORD THE NOTICE OF TRUSTEE’S SALE
The Notice of Trustee’s Sale must set forth the date, time, and place of
the Sale. It must also include the total amount of the unpaid balance
and reasonably estimated costs, expenses, and advances at the time of
the initial publication of the Notice. It must be recorded, posted,
published, and also mailed by registered or certified mail as well as
first class mail to the borrower (Cal. Civ. Code § 2924f).
25 days prior to Trustee’s Sale:
Notice of Sale sent to IRS in case there is an IRS lien recorded more
than 30 days before the date of the Sale (Cal. Civ. Code § 2924b(c)(4);
26 U.S.C. 7425(b)).
20 days prior to Trustee’s Sale: Notice of Trustee’s Sale must be recorded at least 20 days prior to Sale (Cal. Civ. Code § 2924f(b)).
20 days prior to Trustee’s Sale:
Notice of Sale publication begins (must run once a week for 3
consecutive weeks in a newspaper of general circulation) (Cal. Civ. Code
§ 2924f(b)).
20 days prior to Trustee’s Sale:
Notice of Sale must be mailed by registered or certified mail to
everyone who is entitled to receive a NOD. In addition, the Notice of
Sale must also be mailed by 1 st class mail to the borrower (Cal. Civ.
Code § 2924b(b)-(c)).
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DAY 135: LAST DAY TO CURE DEFAULT
Up to 5 business days
before the
Trustee’s Sale, the borrower may reinstate the loan (bring the loan
current) by paying the missed payments plus allowable costs.
Note: If the Sale is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).)
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DAY 105: LAST DAY TO CURE DEFAULT
Up to 5 business days
before the
Trustee’s Sale, the borrower may reinstate the loan (bring the loan
current) by paying the missed payments plus allowable costs.
Note: If the Sale is postponed the date that the borrower may reinstate is postponed accordingly. (Cal. Civ. Code § 2924c(e).)
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DAY 141: TRUSTEE’S SALE FORECLOSURE
After the last day to cure the default, the borrower still has the right
to redeem the property but he/she must pay the entire debt, plus
interest and costs before the bidding begins at the Sale (Cal. Civ. Code
§§ 2903, 2905).
At the Trustee’s Sale, the property is sold through a public auction to
the highest bidder. Title is transferred to the successful bidder by
Trustee’s Deed.
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DAY 111: TRUSTEE’S SALE FORECLOSURE
After the last day to cure the default, the borrower still has the right
to redeem the property but he/she must pay the entire debt, plus
interest and costs before the bidding begins at the Sale (Cal. Civ. Code
§§ 2903, 2905).
At the Trustee’s Sale, the property is sold through a public auction to
the highest bidder. Title is transferred to the successful bidder by
Trustee’s Deed.
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Bottom Line: The
minimum time for a trustee’s sale foreclosure (nonjudicial foreclosure)
is 110 days after the NOD is recorded for most loans (plus 30 days for
loans made between Jan. 1, 2003 and Dec. 31, 2007 on owner-occupied
residential one-to-four unit properties).
This legal article is just one of the many legal publications and
services offered by C.A.R. to its members. For a complete listing of
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Readers who require specific advice should consult an attorney. C.A.R.
members requiring legal assistance may contact C.A.R.'s Member Legal
Hotline at (213) 739-8282, Monday through Friday, 9 a.m. to 6 p.m. and
Saturday, 10 a.m. to 2 p.m. C.A.R. members who are broker-owners,
office managers, or Designated REALTORS® may contact the Member Legal
Hotline at (213) 739-8350 to receive expedited service. Members may also
submit online requests to speak with an attorney on the Member Legal
Hotline by going to http://www.car.org/legal/legal-hotline-access/. Written correspondence should be addressed to:
CALIFORNIA ASSOCIATION OF REALTORS®
Member Legal Services
525 South Virgil Avenue
Los Angeles, CA90020
The information contained herein is believed accurate as of May 4,
2011. It is intended to provide general answers to general questions
and is not intended as a substitute for individual legal advice. Advice
in specific situations may differ depending upon a wide variety of
factors. Therefore, readers with specific legal questions should seek
the advice of an attorney. Written by Sonia M. Younglove, Esq.
Copyright© 2011 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Permission
is granted to C.A.R. members only to reprint and use this material for
non-commercial purposes provided credit is given to the C.A.R. Legal
Department. Other reproduction or use is strictly prohibited without the
express written permission of the C.A.R. Legal Department. All rights
reserved.
