Non-Judicial Foreclosures

Because of the trying economic times, there has been a lot of buzz in the news about different kinds of foreclosures and the serious consequences of a foreclosure. However, within the legal system there are different types of foreclosure with different proceedings, which makes the entire process of foreclosure complicated.

The two most important aspects of this process to know are what the differences between non-judicial and judicial foreclosures and the specific requirements for foreclosures.

A judicial foreclosure goes entirely through the courts and ends with a sheriff’s sale where the highest bidder becomes the newest owner of the property. On the other hand, non-judicial foreclosures are not handled by the court, but instead rely upon the state’s already established laws pertaining to foreclosure. When the loan stops being paid, the homeowner is mailed a default letter and given the opportunity to make the appropriate payments on the loan. However, if the homeowner still does not rectify the loan payments, then the homeowner will receive a letter of intent to sell and other public postings will be displayed throughout the area informing neighbors of the foreclosure. Then at the auction, the home goes to the highest bidder.

Consequently, within the non-judicial realm there are some legal loopholes within California that have judges disagreeing with each other.

Recently in California, in Kachlon v. Markowitz it came to light that Civil Code Section 2924 asserts publication of these notices as privilege under Civil Code 47.

But that section claims to have both a litigation privilege which is absolute and also a common interest privilege, which is qualified by lack of malice. The non-judicial foreclosure section does not state which section of Civil Code 47 privilege applies to, which opens the door to differing opinions from within the California courts.

In another case, the 4th district court held that privilege was absolute, making the non-judicial foreclosure case fall under litigation privilege.

Then in the Court of Appeals, the 2nd district court directly disagreed with the 4th district court’s decision and determined that holding privilege is the common interest privilege. Therefore, under common interest, privilege applies only when the defendant lacks malice.

In this particular case, Kachlon v. Markowitz, the privilege does apply because they did not find malice. With these conflicting Court of Appeal perspectives, any judge within California is free to choose the view that suits them best. Markowitz’s attorney Timothy D. McGonigle, a Los Angeles litigation lawyer, asserts that in these types of situations it’s a case of first impressions and that the judge expanded the potential of trustees when involved on foreclosure properties.

Obviously, in California there are a lot of differing judicial perspectives about non-judicial foreclosures and ultimately depends on both your lawyer and judge