In the event that at a mortgage borrower has defaulted on his or her loan, a bank or the financial institution that provided the mortgage may sell some of the assets that were belonged to the mortgage borrower in order to recoup the losses suffered. This event is usually known as a public auction, but it is also referred to as a sheriff’s sale. The term sheriff’s sale is derived from the use of a sheriff’s office to oversee the sale.
This type of sale is also often known as a foreclosure sale, since the assets are being sold as an opportunity for the borrower to pay for whatever money he or she could not pay. A sheriff’s sale is meant to liquidate property in order to provide banks or financial institutions with some form of compensation as opposed to a tax sale, which is meant to liquidate properties that have existing tax liens against them.
The properties that are included in a sheriff’s sale are part of a court-ordered foreclosure. A sheriff’s sale occurs when a mortgage borrower has defaulted on his or her mortgage and the bank or financial institution that guaranteed his or her mortgage has filed a lawsuit against him or her in a court of law. Once the bank or financial institution has provided evidence that the mortgage borrower has defaulted and has failed to live up to the terms and conditions of the mortgage, the court can rule that the home is to be foreclosed and sold according to the terms and conditions of the bank or financial institution.