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  • Writer's pictureColin Dubel

The Foreclosure Process

Foreclosure is a legal process through which a lender takes possession of a property from a borrower who has defaulted on their loan payments. In California, the foreclosure process for commercial real estate mortgages generally involves the following steps:

  1. Default Notice: When a borrower fails to make timely payments on their commercial real estate mortgage, the lender may issue a notice of default (NOD). The NOD will specify the amount owed and give the borrower a certain amount of time to cure the default, usually 90 days.

  2. Notice of Sale: If the borrower does not cure the default, the lender will then issue a notice of sale (NOS). The NOS must be published in a newspaper and posted on the property at least 20 days before the sale date. The notice will include information about the sale, such as the date, time, and location.

  3. Auction: On the day of the sale, the property will be auctioned off to the highest bidder. The lender may bid on the property to protect its investment.

  4. Trustee’s Deed: If the property is sold at auction, the trustee will issue a trustee’s deed to the buyer. The trustee’s deed transfers ownership of the property to the buyer and extinguishes the borrower’s rights to the property.

  5. Deficiency Judgment: If the sale proceeds do not cover the amount owed on the mortgage, the lender may seek a deficiency judgment against the borrower for the difference.


From the borrower’s point of view:

  1. Reinstatement Period: During the reinstatement period, which is typically the 90 days after the notice of default is issued, the borrower has the opportunity to cure the default by paying the outstanding amount owed to the lender.

  2. Redemption Period: After the auction, there is a redemption period during which the borrower has the opportunity to redeem the property by paying the amount owed to the successful bidder.

  3. Eviction: If the borrower is unable to redeem the property within the redemption period, the successful bidder will take possession of the property. The new owner may then initiate eviction proceedings to remove the borrower from the property.

It is important to note that the foreclosure process can be complex and may be subject to different requirements and timelines depending on the specific circumstances of the case. Therefore, it is advisable to consult with a real estate attorney who is familiar with foreclosure law to understand the borrower's rights and options during the process.


If you have any questions about this article or would like to discuss a scenario of your own with our team, please feel free to contact Colin Dubel at colin@harborwestcommercial.com or 949-735-6415.

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