A foreclosure through judicial sale is available in all jurisdictions and it’s the preferred method in many areas. These foreclosures involve the sale of the property under court supervision, with proceeds paying lenders and other lienholders. A judicial foreclosure requires care by the lender to ensure that all relevant parties are included, so the buyer of the property receives a valid title.
Relevant Parties in a Judicial Foreclosure
A lender bringing a foreclosure in Chandler, AZ must notify necessary parties to the case. To understand which parties are necessary, it bears remembering that foreclosure is intended to sell the property in the condition it was in when the mortgage was obtained. Anyone with an interest acquired after a mortgage must be included in the proceedings before the property is sold. Relevant parties include those who have leases, liens or easements after execution of the mortgage.
Parties Proper to Judicial Foreclosure
Other parties are known as “proper” parties to a foreclosure in Chandler, AZ. Proper parties are those that are useful but not imperative to the case, such as one who had interest before execution of the mortgage. Because this person would be unaffected by foreclosure, they are regarded as voluntary to the case and cannot be included without consent.
Procedures in a Judicial Foreclosure
Judicial foreclosure methods vary by jurisdiction, but they typically call for a sheriff or other public official to perform the sale. Mortgage holders can bid for the property. If a lienholder who acquired interest after the mortgage isn’t named in the case, they can redeem the lien and take possession of the property by paying the mortgage-related debt. For omitted lienholders, the purchaser can pay them for their interest or re-foreclose to eliminate it.
Deficiency Judgment
When the proceeds of a judicial sale are insufficient to pay the balance on the mortgage, the lender can file a deficiency judgment against the borrower for the difference. For instance, a holder of a $50,000 mortgage who only gets $40,000 in the sale can sue the debtor for the remaining $10,000. In many jurisdictions, deficiency judgments are mitigated with legislation. These “fair value” laws require deficiencies to be calculated using the difference between the property’s value and the mortgage debt. In the example cited above, the court may determine that the property’s fair value was $8000. In that case, the deficiency judgment would be capped at $2000. Click here for more information.
