Foreclosure Laws in Southern California

Although the foreclosure laws in Southern California are quite complicated, they are viewed by most people as friendly to consumers. The state is considered a so-called "title state" where the title to the property on which foreclosure proceedings have taken place remains in trust until the payment of the debt is completely made. If you are about to have your home foreclosed, it pays to know the basics of the laws in effect in Southern California.

Court Rarely Involved

Most deeds are written to include the right of the lender to sell the property in the event of a deficiency. In those cases, and they represent the majority, the sale can commence without court approval. In Southern California as well as other parts of the state, a title company will act as trustee on behalf of the lender and there are very strict requirements with regard to communications with the lender's client. Also, in non-judicial foreclosure proceedings, a lender may not sue the customer if the sale does not yield enough to cover the loan. Technically, this is referred to as the "one-action rule." Finally, a court will be involved if the lender does not have power-of-sale.

Notification

First, the lender must record a "Notice of Default" in the county where the property is located. This can take place immediately following a missed payment, but it usually happens when the customer misses several payments. This is referred to as the "redemption period" during which the customer can bring his account up-to-date. Then a "notice of sale" is filed in the same jurisdiction that contains the trustee's name, the address of the property and the lender. It must appear at least 14 days before the sale of the property is arranged. Following that, the borrower must have at least a 20-day notice before the sale is conducted. The sale must be at the property and it must be conducted between 9AM and 5PM. The borrower can still bring his account up-to-date but that must occur at least five days before the auction.

Timing

As a practical matter, most foreclosures will be completed about four months after the lender begins action to foreclose on the property. Of course, the borrower can declare bankruptcy or contest the foreclosure which will add to the time when the property can be sold.