Also known as: judicial foreclosure sales · judicial sale
Written by attorneys · grounded in primary & secondary sources — see below
A supervised public auction of mortgaged property conducted under court order after default to satisfy the secured debt. The court oversees advertising, timing, and location of the sale, typically through a public official such as a sheriff. This process protects the mortgagor's equity by returning any surplus above the debt and limits post-sale challenges when the proceeding is regular.
Robert and Linda Morales default on their home loan after job loss. The lender sues and obtains a court order for foreclosure. The sheriff advertises and conducts the public auction. Surplus proceeds above the debt are returned to the Morales family.
Thomas Reed defaults on the mortgage securing his farm. The bank initiates foreclosure litigation. The court supervises the sale by the sheriff. Any excess funds after the debt are paid to Reed to protect his remaining equity.
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A court will not set aside an otherwise regular judicial foreclosure sale merely because the price is low compared with market value. The challenger must show that the price was grossly inadequate. Courts accept substantial discounts at forced sales because bidders face risk and limited information.
The mortgagee must file a lawsuit. The court then supervises advertising of the sale and designates the time and place. A public official such as a sheriff conducts the auction, and the court confirms the sale.
A judicial foreclosure sale occurs only after a court action and under judicial supervision. A power-of-sale foreclosure is conducted by the trustee or mortgagee without filing suit when the mortgage or deed of trust grants that authority.
…section 53 (2d ed. 1966), states: By the weight of authority, it is held that a court of equity has the power to order a judicial sale of land affected with a future interest and an investment of the proceeds, where this is necessary for the preservation of all interests in the land. When the power is exercised, the…