A judicial foreclosure is an action taken by a state or local court to foreclose a piece of real estate property. A property that undergoes this proceeding is considered to be safer to purchase compared to those that are foreclosed in an extra judicial manner.
This procedure involves the sale of a mortgaged property through the supervision of the court. Proceeds of this sale are divided between the lender and lien holders. If there’s a remaining amount, this would normally go to the borrower.
It’s usually the lender who initiates the foreclosure when a borrower is no longer able to pay his monthly dues. All parties are then informed of the legal action but the way the notification is done can vary from one state to another.
The lender can record a notice of Lis Pendens with the court. This notice aims to inform the public that the property is under litigation and therefore, not safe to purchase until the court has issued a decision.
The notice for the homeowner is served in two ways – through mail or by direct service. In cases where the court has no information on the whereabouts of the homeowner, a notice of publication is normally filed.
When the hearing of the foreclosure starts, both parties are given the opportunity to present their case and defend it. Should the court finds the homeowner to be at fault, it shall immediately order the foreclosure of the property.
When a real estate property undergoes judicial foreclosure, the decision made by the court can no longer be revoked by any other party. It’s only through another court proceeding that it can be reopened and discussed again.