FILING A COMPLAINT

Unlike non-judicial foreclosure, judicial foreclosure involves formal litigation in state court. Thus, a judicial foreclosure is initiated, not by filing a Notice of Default, but by filing a complaint in the appropriate court, which is usually the California Superior Court for the county in which the property is located.

The complaint must name as defendants all parties who have a recorded interest in the property and whose interests will be affected by a foreclosure. There is a severe remedy for failing to name parties. If a person has a recorded interest in the property, such as a junior lien, a homestead interest, a lease or any other type of interest, and he or she is not named in the complaint, then the decree of foreclosure will not affect his or her interest. In other words, the foreclosure only wipes out interests of parties who are named in the complaint. Code of Civil Procedure Section 726(c). (Holders of trust deeds or mortgages which are senior to the lien being foreclosed need not be added as parties to the complaint, because their lien will not be affected by the foreclosure anyway.)

As a matter of prudence, a foreclosing party should add as defendants anyone who may have an interest or who the lender wishes the judgment to bind. The spouse of the owner should almost always be added. If anyone has guaranteed the debt, he or she should be sued as well.

If a senior mortgage-holder is foreclosing judicially, a junior mortgage can foreclose its lien, in the same action, by filing a cross-complaint for foreclose of its lien.

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