Laws regarding foreclosure property differ from state to state in the United States. As per the in Washington DC foreclosure laws all foreclosure properties are to be dispensed with using a non-judicial process. Unlike Washington DC Several other states make the judicial process an available option. In case of default in loan payment lenders can start the non- judicial processes. The court comes into the picture only when there is any ambiguity in the documents involved.
The average time taken for a non judicial process in the event of sale of foreclosures is sixty days. The primary security instrument that plays a pivotal role in such processes is the Deed of Trust. Washington DC foreclosure laws do not provide for borrowers to have any Right of Redemption. However, Washington DC laws allow lenders to sue for Deficiency Judgments if the selling price of the distressed property turns out to be less than the amount that is due from the borrower.
Washington DC Foreclosure Laws
For a non judicial foreclosure, it is essential that the mortgage agreements have a "Power of Sale" clause. When both the parties i.e., the borrower and the lender agree to the power of sale clause it implies that the borrower will agree to a non judicial foreclosure of the property. The power of sale clause states that the borrower concurs to the sale of the distressed property to settle outstanding balances on the property loan. As per the conditions laid down in the power of sale clause, the lender or a representative appointed by him can officially transact the sale of the distressed property.
It is essential that the mortgage documents or the deed of trust document be worded very carefully. This is of extreme importance where the wordings of the power of sale clause are concerned. This clause should lay down specifically relevant details like time and place of sale of the foreclosure property, and, any other relevant terms agreed upon by the lender and the borrower.
Sometimes there are a few grey areas in the power of sale clause. When this happens the matter is referred to a court which then clarifies essential details and sets the terms of sale of the foreclosure property.
As per the agreement a few notices need to be sent to the borrower and the authorities. The Notice of Intent to Sell should be sent to the borrower by the lender and should also be sent to the Mayor of the District of Columbia. This notice should be sent in such a manner that there is documentary evidence of its receipt by the borrower. It is essential to send this notice at least a month prior to the date of sale of the foreclosure property.
The usual mode of sale of foreclosed property is through public auction. As with any other auction the distressed property is sold to the highest bidder for cash.
