Property Owner Rights Later Foreclosure

Foreclosure is the legal procedure which occurs when a borrower defaults on his mortgage obligations so the mortgage creditor sells the mortgaged property and uses the money to satisfy the mortgage loan. The mortgage process entails two separate property owners’ rights, such as the rights of the borrower who lost his home to foreclosure and the man who buys the property at the foreclosure sale.

Redemption

After foreclosure, California law provides one very important legal right for your borrower who lost her property. That right is known as the right of salvation, and it means the borrower may redeem the mortgage at any time within a year following the foreclosure sale. To redeem the mortgage means to pay back the complete amount owed at the time of the foreclosure sale, such as principal, interest, late fees and costs incurred by the creditor at holding the foreclosure. In case the borrower accomplishes the mortgage within a year following the foreclosure sale then the borrower has the right to take the property back instantly, even if someone else purchased the property at the foreclosure sale.

New Owner

The new property owner who buys a foreclosure property has whatever rights the foreclosing lender had from the property. Property rights in California are ranked according to priority of time. Consequently, if the foreclosing creditor has a first mortgage on the home then the buyer at the foreclosure sale will purchase the property free and clear of any other exemptions. However if the borrower had a lien on his property at that time the foreclosing creditor forced the mortgage loan then the buyer at the foreclosure sale will probably purchase the property subject to that lien.

Trustee’s Deed

In California many mortgage loans actually use a deed of trust to lien the mortgaged property. Under the deed of trust the creditor can hire a third party, called a trustee, to execute foreclosure without going to court. This is known as power of sale foreclosure. The trustee must follow certain legal processes, such as sending out notice of a foreclosure sale and also holding a public auction at the foreclosure sale. The purchaser at the foreclosure sale may require title to the property by means of a trustee’s deed. The trustee’s deed includes a guarantee that the trustee carried out the appropriate procedures to properly and legally foreclose. The new buyer has the right to rely on these representations from the trustee’s deed, which means the new owner can’t lose title because the trustee made an error in the foreclosure procedure.

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