California allows foreclosure by the power of sale, which might be preferable when it is compared to a judicial sale because it markedly reduces the time spent selling a foreclosed property.

California allows foreclosure by “power-of-sale”

A “power-of-sale” provision is a clause, that when included in a deed of trust or mortgage, allows the borrower to pre-authorize the sale of the property to pay off the balance on a loan if the borrower defaults (fails to make the loan payment when due). Foreclosure by power of sale involves the sale of the mortgaged property by the mortgage holder (usually a bank or other lender), rather than a sale supervised by the court (a judicial sale).

“Power-of-Sale” more expedient for foreclosures

Power of sale is a generally more expedient way of foreclosing on a property, when compared to foreclosure by judicial sale, because it requires the sale of mortgaged property to be under the supervision of a court.

Proceeds from a power of sale foreclosure first go to the mortgage holder. If there is any money left over, it will go to those who are holding liens on the property and then, lastly, to the borrowers. Foreclosure by the power of sale accomplishes the same thing as a judicial sale.

Additional Pros

Some additional pros associated with power of sales include are: the terms of the sale can often be tailored and negotiated in the mortgage contract, and also sometimes result in all the parties receiving proceeds from the sale. Some cons to consider are: even though the court might not be involved at the outset, it might become necessary later on if there are, for example defects in the deed, as well as in some jurisdictions, a deficiency judgment might not be available if the parties choose to foreclose outside of court proceedings.