There are two types of foreclosure that are allowed in the state of California, Judicial Foreclosure and Non-Judicial Foreclosure.
|Requires Court Trial||No||Yes|
|Expedited Time Frame||Yes – 111 Days||No|
|Right of Redemption||No – Except HOA liens, which have 90 days||Yes – 1 Year|
|Deficiency Judgment||No||Yes – Except Purchase Money|
Judicial Foreclosure is very rare in California and requires the lender to sue the owner in foreclosure and proceed with a trial in a court of law. Appraisals and other items are required, and there is still an auction. The owner has the right of redemption allowing them to buy it back from the successful bidder at auction for 1 year after the sale. The advantage of judicial foreclosure for the lender is that they can receive a deficiency judgment against the borrower for the difference between the amount owed (including penalties, fees and costs), and the amount received at auction.
Non-Judicial Foreclosure is what most people are referring to when they talk about “foreclosure” in California. This type of foreclosure is sometimes also referred to as “Foreclosure by Power of Sale” as the deed of trust (mortgage) must contain a power of sale clause. It is also often referred to as a “Trustee Sale” as the sale is handled by the trustee appointed in the deed of trust. Although lenders give up their right to collect a deficiency judgment against the borrower, this tends to be the preferred process given the expedited time frame. Non-judicial foreclosure sales are typically not held on the original sale date and can be postponed for up to 1 year based on certain postponement reasons.