The procedure followed in the foreclosure of...

The procedure followed in the foreclosure of real property has changed recently.

Upon default by the trustor (borrower), the procedure had long been that the beneficiary (lender) would cause a notice of default be recorded with the county recorder, and the borrower had three months thereafter to “cure.”

This meant that the borrower could reinstate, within the three-month period, by paying the amount in arrears plus any foreclosure costs.

After the three-month period elapsed, the beneficiary had a right to cause a notice of trustee’s sale to be recorded, and thereafter sell the property at a public auction. This sale could not take place earlier than the 21st day after expiration of the initial three-month period, but the trustor had no legal right to “cure” after the notice of sale had been recorded, his only right being to pay off the entire obligation prior to the foreclosure sale.

One of the most important pieces of legislation affecting real property passed by the Legislature in 1985 relates to the right of the trustor to “cure.” The new legislation extends the time to “cure” a default to five business days before the actual sale date.

This change could have great significance to a defaulting borrower who is scurrying about attempting to avoid the loss of his property through foreclosure. This change in the law affords the borrower a minimum of approximately two additional weeks to reinstate the loan by paying the amount in arrears. After that he must pay off the full amount due under the loan or lose the property.