Nonjudicial Foreclosure (Power of Sale)

How it works

• The security instrument — commonly a deed of trust naming a trustee — contains a power-of-sale clause.
• After a default, the trustee or foreclosing party follows the state statute: typically recording or serving a notice of default, waiting a set period, then giving a notice of sale before a public auction.
• No judge approves the sale in advance. A borrower who believes the process is defective generally must file a lawsuit to challenge it — sometimes before the sale to stop it, sometimes after the sale for wrongful foreclosure.

Strict compliance with the statute

Because there is no court supervision, state statutes set out the notice content, timing, publication, posting and sale requirements in detail. Defects in following those requirements are a common subject of litigation.

Federal rules still apply

For most residential mortgage loans, federal servicing rules limit when the first notice or filing can be made and restrict sales while a complete loss mitigation application is pending. See federal pre-foreclosure protections.

State law controls

Foreclosure is governed mainly by state law, and procedures, notice periods and redemption rights differ from state to state. See foreclosure by state for each state’s process and governing statute.

Researching nonjudicial foreclosure in your state

To research nonjudicial foreclosure for a real matter, start with the primary sources. For example, read the statute, the rule and the documents in your own file. Then look for recent appellate decisions from your state, because they control how local courts read the law. After that, compare what you found with the federal rules that may also apply. Our state procedures guide and the Research Center can help you find and check each source.

Sources and further reading

Official sources used on this page:

• Current federal rules of practice and procedure (uscourts.gov)

Related reading on Lawtopolis:

• Foreclosure: How It Works
• Judicial Foreclosure
• Chain of Title
• Assignments of Notes, Mortgages and Receivables