How does Trustee Sales work?

How does trustee sales work?

A trustee sale, also known as a foreclosure auction, is a legal process by which a property is sold at auction to satisfy a debt, typically a mortgage or a trust deed when the borrower defaults on their loan payments. This process is used in states that operate under a non-judicial foreclosure system, which means that the foreclosure process doesn't require court intervention.

Here's how a trustee sale typically works:

1. Loan Default: The property owner (borrower) defaults on their mortgage payments. The lender initiates the foreclosure process due to the default.

2. Notice of Default (NOD): The lender issues a Notice of Default, informing the borrower that they are in default and that foreclosure proceedings will begin if the default is not remedied within a specified period (usually around 90 days).

3. Notice of Trustee Sale (NTS): If the borrower doesn't cure the default by bringing the loan current, the lender issues a Notice of Trustee Sale. This notice states the date, time, and location of the auction, typically held at a public place like a courthouse. The NTS is also recorded with the county recorder's office.

4. Public Auction: On the scheduled date, the trustee (usually a third party appointed by the lender) conducts the auction. Bidders, which can include investors and individuals, compete to place bids on the property. The bidding usually starts with the amount owed on the mortgage plus any associated fees. The highest bidder wins the property, assuming they meet the payment requirements.

5. Payment: The winning bidder is usually required to pay a certain percentage of the winning bid amount immediately, often in the form of cash or a cashier's check. The remaining balance is typically due within a short period (24 to 48 hours) after the auction.

6. Title Transfer: If the winning bidder pays the full amount within the specified timeframe, they receive a trustee's deed, transferring ownership of the property to them. This deed should be recorded with the county recorder's office.

7. Redemption Period (if applicable): Some states allow a redemption period after the auction during which the original owner can reclaim the property by paying the total amount owed plus additional costs. The length of the redemption period varies by state.

Dorsey's Realty Disclaimer -  Remember, consult with an attorney who specializes in probate and trust matters to ensure that the disclaimer meets the specific legal requirements and addresses the unique circumstances of your situation. This disclaimer is a general example and may need to be customized to fit the specific circumstances and legal requirements of the probate estate or trust you are dealing with. It is always advisable to consult with a legal professional to ensure compliance with relevant laws and regulations.