In California, the most common type of foreclosure is non-judicial. As the name suggests, a non-judicial foreclosure is one that occurs without any court action. Non-judicial foreclosures take place entirely outside the court system, unless something goes wrong and someone files a law suit. Non-judicial foreclosures are started by the filing of a Notice of Default, which is followed by a Notice of Sale and then by the foreclosure sale itself.
Non-judicial foreclosures are faster, cheaper and easier to complete than are judicial foreclosures. They are thus far more common than are judicial foreclosures. The primary disadvantage of a non-judicial foreclosure, from the lender’s perspective, is that the lender can not recover a deficiency after a non-judical foreclosure. Code of Civil Procedure Section 580d. Another major difference is that the borrower has no right of redemption, after a non-judicial foreclosure, while he or she does have a right of redemption after a judicial foreclosure.
Non-judicial foreclosures are creatures of contract. The lender has no right to conduct a non-judicial foreclosure unless its deed of trust contains a power of sale clause. Because non-judicial foreclosures are created by contract, their precise terms can be altered, to some degree, by contract. The California Legislature, however, has enacted a comprehensive set of laws, which set minimum standards for non-judicial foreclosures. These laws protect borrowers.