What is a Notice of Trustee Sale?
When homes go through foreclosure, they may end up being auctioned off during a Trustee’s Sale. A Notice of Trustee Sale is a legally-required public declaration that a house is about to be auctioned off. Typically, bidders will have three weeks to register for the auction to bid on the foreclosed house.
Notice of Trustee’s Sale
In California, a Trustee’s Sale allows the lender to regain the value of the property if the tenant is in default on the mortgage. After a Notice of Default has been posted for at least 90 days, a lender is then entitled to issue a Notice of Sale, or Notice of Trustee’s Sale.
What is a Trustee?
A trustee is a legal designation for a third-party who conducts business as a mediator. The trustee is the one who files a Notice of Default which establishes the names of the people who are defaulting on the mortgage and the lender. This notice is recorded and shows how much the lendees owe to the lender to prevent foreclosure from taking place. In California, lendees have 90 days to restore payments.
Publishing the Notice of Trustee’s Sale
California law also requires that the lender publish a notice in a local newspaper for three consecutive weeks. The notice should give information about the owners of the property, the property itself, and when the sale will take place. This public notice allows a variety of bidders to get involved on the property, which helps lenders recoup more of the value of the mortgage.
During the 21-day period that the notice is published, bidders have a chance to register for the sale. There’s usually a range of institutions and individuals who bid on properties at Trustee’s Sales. Some people might be looking to buy a house outright, but many people will be trying to flip the property for more money.
Curing a Default After a Notice of Trustee’s Sale is Issued
If you are the owner of the home and are in default of the mortgage, you must act quickly after a notice of trustee’s sale is issued. You only have 5 days after the Notice of Trustee’s Sale is issued in California to cure the default and prevent the foreclosure sale from taking place.
On the other hand, the bank has a full 21-day period to decide whether or not to redeem the home up until the foreclosure sale. The bank may decide to pay the loan in full.
Trustee Sale Process
What Happens At a Trustee Sale?
Once the notice of the sale is published, a variety of bidders can get involved in the property. These might be financial institutions, real estate companies, or even private buyers. Interested parties generally have to deposit a check, either for a small amount or for the whole property. Checks are returned to any bidder who doesn’t actually buy the property.
The lender gives the trustee a bid amount to set the opening bid at. The opening bid usually involves the bare minimum of the property, including taxes and fees. Bids can increase from there.
What Happens After a Trustee Sale?
Once a trustee sale is complete, the property deed is immediately signed over to the new owner. They may rent the property to the current tenants or file for formal eviction of the tenants have not left.
The California Judicial Foreclosure Process
The California foreclosure process requires that the lender contact you and anyone else who appears on the mortgage to update you on the financial situation. You have 30-days to work something out with the lender. If you and your lender cannot work out a plan that helps avoid foreclosure, the lender then can file a Notice of Default, which marks the beginning of the foreclosure process.
If you don’t pay what you owe within 90 days that the Notice of Default is posted, then the lender may post a Notice of Sale. Within the Notice of Sale, the trustee is agreeing to sell your home at an auction in 21 days. The notice of sale must be sent to you directly and also must be published in the newspaper.
21 days or more after the Notice of Sale is posted, the property can be sold at a public auction. The public can then bid on real estate. As soon as the trustee sale takes place, the buyer may take immediate legal possession of the property.
What’s the Difference Between a Trustee’s Sale and a Foreclosure?
The Trustee Sale is the formal auctioning of foreclosed properties at the county courthouse. Once properties are foreclosed, they go to the trustee’s sale.
Trustee’s sales are basically auctions that take place when someone fails to pay the mortgage as agreed. It’s a way for the bank to attempt to regain their loan.