Sheriff Sale 101

What is the Sheriff Sale

A sheriff's sale is a public auction sale of property held by the sheriff pursuant to a writ (court order) of execution (to seize and sell the property) to satisfy (pay) a judgement, after notice to the public. There are three types of sales that take place at these auctions, Mortgage foreclosure, Tax lien, and Tax sale. Each property is listed by its book and writ number. The highest bidder is required to immediately submit ten percent of the winning bid while at the auction. The rest of the money must be paid to the Sheriff's Office no later than thirty days following the auction, and this varies state by state. If the money is not paid, the house/property will be auctioned off at the next sale.

What is the Judicial Foreclosure

Judicial foreclosure is allowed in all states, and occurs when the lender files a civil lawsuit against the borrower, with the entire process being handled by the court. Judicial foreclosures can be further divided into two types: foreclosure by sale, and strict foreclosure. Foreclosure by sale requires the home to be auctioned to the highest bidder with the lender placing the first, or opening, bid. These auctions are commonly referred to as sheriff sales. In a strict foreclosure, the court sets a date by which the owner must pay the mortgage, and if the owner fails to pay, the court awards ownership of the home to the lender with no auction taking place. The judicial foreclosure process begins when the lender files their lawsuit, at which time they also file a lis pendens (LIS) on the property. The lis pendens is a document recorded with the County Recorder’s office, to let potential buyers, lenders, and others know of the pending foreclosure lawsuit. A second notice, the Notice of Foreclosure Sale (NFS), is typically filed once the court has set the auction time and bid amount.

What is the Non-judicial Foreclosure

The non-judicial foreclosure process allows a lender to advertise and sell the property at a public auction, without court involvement, by following a process specified by the state. As the process is laid out in state laws, or statutes, the non-judicial foreclosure process is sometimes also referred to as Statutory Foreclosure. A key requirement for non-judicial foreclosure is that the borrower agreed to the process when they took the loan. To accomplish this, a power of sale clause is added to the mortgage, or deed of trust, which gives a third-party trustee the right to sell the property in the event the borrower does not make their payments. Given this clause, non-judicial foreclosures are sometimes referred to as foreclosure by power of sale. In most non-judicial foreclosure states, the foreclosure process is started when the lender files a Notice of Default with the County Recorder’s office, putting the homeowner and anyone else who is interested on notice that the loan may be foreclosed on. A second notice, the Notice of Trustee Sale is typically filed 30 to 120 days later, depending on the state; and sets the auction date and time. In a few states, only the Notice of Trustee Sale is recorded.

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Legend: - Judicial | - Both, usually non judicial | (DC) - Nonjudicial | - Both, usually judicial | - Both