Alabama Foreclosure Law
Alabama State Foreclosure Law dictates that lenders may avail of the Judicial and Non-Judicial processes to foreclose deeds of trust or mortgages in default. The typical time of process last about 30 - 60 days, depending on the process employed, and the deeds of trust and mortgages are the security instruments used. Deficiency Judgments are allowed and so is the Right of Redemption, as long as it stays within the 12-month grace period.
Judicial Foreclosure is used when no power of sale exists in the security instruments. Petitioners must file a lawsuit in order to obtain a court order to foreclose. However, the lenders may opt to forego a lawsuit and sell the property outright, as long as they abide by the prescribed guidelines. On the other hand, Non-Judicial Foreclosure is used when a power of sale clause is expressed in the security instruments. “Power of Sale” is the process wherein the borrower agrees to sell the property in dispute to settle the remaining balance from a loan in case of default. Its most obvious difference from the judicial foreclosure is that it doesn’t need any court order to auction off the property as it is already stated in the security instruments. The lender or their duly designated representative, commonly referred to as the “trustee,” may execute the “power of sale”.
Power of Sale Foreclosure Guideline
- Should the security instruments contain a power of sale clause, the terms specified therein should be strictly followed. Otherwise, should no specific place, date, and time is named in the security instruments, then the foreclosure sale may be held at the front door of the county courthouse where the property is located.
- The sale must be done through an auction to the highest bidder for cash.
- The auction should not take place in less than 30 days after the publication of the last notice of sale.
- The notice of sale should have been published once a week for 4 consecutive weeks in a countywide newspaper circulated in the property’s locale. If the property is under mortgage in more than one county, the publication should circulate in all the counties involved. If there is no newspaper in circulation at the property’s county, the notice shall be published in a newspaper of an adjoining county for 4 consecutive weeks.
No Power of Sale Foreclosure Guideline
If no power of sale is contained in the security instruments, the lender, or a trustee, after default of the mortgage or deed of trust, may either file a lawsuit to foreclose or sell the property outright through a public auction held at the county courthouse of the property’s locale. However, the auction should not take place until after the time, place, terms, and purpose of the sale has been published for 4 consecutive weeks in a countywide newspaper circulated in the property’s locale. If there is no newspaper in circulation at the property’s county, the notice shall be published in a newspaper of an adjoining county for the same period of time.
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