What does “foreclosure” mean in California?

21 07 2011

“Foreclosure” is not new in California.  But there is one important detail that people miss when discussing the topic – there are TWO types of “foreclosures” in California.  In both cases, a debt is owed to someone.  We’ll call this person the “Lender” even though it might not be the person who made the loan.  In both cases, the loan is secured by real property (“real property” simply means real estate as opposed to “personal property” which is other property).

The first is the most common: “non-judicial.”  In non-judicial, the lender auctions off the property through a “trustee sale.”  This auction, and the procedure surrounding it, has to comply with certain laws.  But nothing has to be filed in court.

The second is less common, but has its own benefits and risks for both parties: “Judicial.”  In a judicial foreclosure, the lender files a lawsuit in court so that the auction actually goes through the court system.

It is important to know which you are discussing because there are vastly different legal ramifications between the two.