Bankruptcy and California Foreclosure Law

09 May Bankruptcy and California Foreclosure Law

In California, there are two ways to foreclose on a piece of property: through a title company, and by a judicial process in court. Most of the time a title company is used, because it is quicker and less expensive.

A title company foreclosure starts with a notice of default: a legal document sent to the landowner indicating that they are behind in their payments. Once that document is recorded in the recorder’s office, the landowner has 90 days to bring the note current by paying all missed payments, interest, late charges and fees for filing the foreclosure. After 90 days, the title company will issue a notice of sale and set the property to be sold at public auction, at least 20 days later. The landowner can still redeem the property by paying all the arrearage up until a week before the sale. After that, the only way to stop the process is to either pay everything owed to the mortgage company or to file bankruptcy.

In a judicial foreclosure the note-holder files a complaint in the Superior Court. That starts the process, but because the landowner can file a response to the complaint and fight the entire process by going to trial, it takes much longer and is more expensive.

In most cases, a note-holder can’t get a deficiency judgment in California when the property being foreclosed is a single family residence. There are exceptions but they all require a judicial foreclosure. As noted, that process is used very infrequently.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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