Also known as:nonjudicial foreclosure · non judicial foreclosure
Written by attorneys · grounded in primary & secondary sources — see below
A foreclosure proceeding conducted without court supervision under the terms of the mortgage or deed of trust and applicable state statute. The proceeding terminates the mortgagor's equity of redemption and transfers the property or its value to the mortgagee. It may begin only after default and full satisfaction of all contractual and legal conditions precedent.
Sources & Authorities
How it applies
Common Examples
2
Escrow Shortage Triggers Notice Dispute
Nalini Narula missed an escrow deposit for property taxes on her commercial building by ten days because of an internal accounting error. The lender's servicer posted a nonjudicial foreclosure notice at the courthouse and on the property without first sending written notice of the shortage or allowing the thirty-day cure period required by the mortgage. Narula immediately wired the missing funds and sued to stop the sale, claiming the contractual conditions had not been met.
Default Without Required Preconditions
Nolan Nunez defaulted on his home loan after a health department closure of his restaurant. The lender posted nonjudicial foreclosure notices on the property without first sending written notice of default or an opportunity to cure as required by both the mortgage and state law. Nunez had continued making all loan payments from personal savings and sued to enjoin the proceeding.
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Practice Questions5
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Uniform Acts
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Common Law
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Course Outlines
Common questions
Frequently Asked
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What must occur before a creditor may commence nonjudicial foreclosure?+
A default in the obligation must exist. All conditions required by the mortgage agreement and by law must also be satisfied. These conditions commonly include written notice of default and an opportunity to cure.
Supporting sources
Does a temporary accounting error that is promptly cured prevent nonjudicial foreclosure?+
The error constitutes a default when the payment is missed. The default alone does not authorize foreclosure if the mortgage requires prior written notice and a cure period that the lender failed to provide.
Supporting sources
May a lender commence nonjudicial foreclosure based solely on a non-monetary covenant breach?+
A non-monetary breach can create a default under the mortgage terms. The lender must still satisfy every additional contractual and statutory condition, such as notice and cure opportunities, before commencing the proceeding.
Supporting sources
What happens if the lender posts foreclosure notices without board ratification or formal cure notice?+
The statutory and contractual prerequisites remain unsatisfied. The borrower may obtain an injunction because the dual requirements of default and full compliance with conditions have not both been met.
Supporting sources
Real PropertyMortgages and foreclosure · Mortgages and deeds of trustNEXTGENAdvanced