Legal Definitions - Non-Judicial Foreclosure

Non-judicial foreclosure is a legal process that allows lenders to foreclose on a property without obtaining a court order first. This process is only available for deeds of trust that have power-of-sale clauses and is not available for traditional mortgages.

Before foreclosing, lenders must give special notice to the property owner and wait for a specified time before auctioning off the property. Non-judicial foreclosures are heavily regulated in jurisdictions where they are available.

John took out a loan to buy a house and used the property as collateral. However, he was unable to make his mortgage payments, and the lender decided to foreclose on the property. Since John's loan was a deed of trust with a power-of-sale clause, the lender was able to initiate a non-judicial foreclosure process. The lender gave John notice of the foreclosure and waited for the specified time before auctioning off the property.

This example illustrates how non-judicial foreclosure works and how it can be used by lenders to foreclose on a property without going through the court system.