Foreclosure In California -- Kawika Ohumukini

When you buy a property and take out a loan, several pieces of paper change hands. Here we will talk about the Grant Deed, Promisorry Note, and Trust Deed. The Grant Deed is given by the previous owner to you which transfers legal title to the property. At this point you now own the property.

The Borrower (you) give a Promissory Note to the Lender who in exchange gives you a lump sum of money to purchase the property called "Purchase Money".

The Trustor (you) also give a Trust Deed to the Trustee (3rd party) which collaterizes the Promissory Note with real property. This places a lien on your property for the outstanding balance of the Promissory Note. The Beneficiary (Lender) of the Trust Deed is said to have a Beneficial Interest in the property.

The Trustee has two powers; power to Reconvey the Trust Deed (when the underlying Promisory Note is paid off) or in case you default on payments to sell the Beneficiary's interest in the property at a Trustee's Sale (usually the outstanding balance plus legal and foreclosure costs).

The timeline below will help you understand what the procedure is during foreclosure. Your have certain rights at each stage of the process.

Foreclosure Timeline

CALENDAR DESCRIPTION
Late Payments Lender can file Notice of Default 1-day after grace period.
Start (day 1) Notice Of Default recorded with County Recorder.
Within 10 business days Trustee mails Notice Of Default to borrower(s), all lien holders, and other entities that have recorded a Request For Notice. 
Within 1 month 2nd Notice of Default mailed to borrower.
After 3 months Trustee can set Sale Date, time and location. 
25 days prior to Sale Date Trustee sends Notice Of Sale to IRS (if applicable).
20 days prior to Sale Date - Trustee begins publishing Notice Of Sale in an adjudicated newspaper. (must run for 3 consecutive weeks).
- Trustee posts the Notice of Sale on the property itself.
- Trustee mails Notice of Sale to borrower(s), lien holders, and other entities that have recorded a Request For Notice.
14 days prior to Sale Date Record Notice of Sale with county recorder's office.
5 days prior to Sale Date The borrower's right to reinstate ends. The lender has the right to call the entire loan due.
On Sale Date At Trustee Auction the Foreclosing Beneficiary opens bidding and the property goes to the highest bidder.

Important California Civil Codes dealing with Foreclosure.


Civil Code Section 1695 - Equity Purchasing

Civil Code Section 2924 - Trustee's Sale Procedure

Civil Code Section 2945 - Foreclosure Consulting


You can read more about the Foreclosure Process in California at www.foreclosure-info.us.