Also known as: power of sale foreclosure · nonjudicial foreclosure · power-of-sale foreclosure
Written by attorneys · grounded in primary & secondary sources — see below
A method of foreclosure conducted without court supervision pursuant to a power-of-sale clause in the mortgage or deed of trust and applicable state law. The mortgagee or trustee may sell the property after default once all contractual and statutory conditions are satisfied. This process terminates the mortgagor's equity of redemption and allows the mortgagee to obtain the property or its value.
Floyd Franklin defaulted on payments secured by a deed of trust on his commercial building. The beneficiary directed the trustee to sell the property under the power-of-sale clause after confirming default and satisfying all notice requirements under state law. The trustee conducted the sale without court involvement and transferred title to the highest bidder.
Forrest Falconer fell behind on his home loan secured by a mortgage containing a power-of-sale provision. The creditor verified the default and met every contractual and statutory precondition before authorizing the trustee to proceed. The trustee then sold the residence at a public auction without filing any court action.
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A creditor may commence nonjudicial foreclosure only after default in the obligation and satisfaction of all conditions required by the mortgage agreement and by law. The mortgage or deed of trust typically supplies the power-of-sale clause that authorizes the trustee or mortgagee to sell the property.
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Foreclosure by power of sale proceeds without court supervision under the mortgage or deed of trust and state statute. Judicial foreclosure requires filing an action in court and obtaining a judicial decree before the sale can occur.
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A foreclosure sale price obtained pursuant to a regularly conducted proceeding does not render the foreclosure defective unless the price is grossly inadequate. Compliance with statutory notice and procedural requirements generally protects the sale from challenge based solely on price.
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