What is a Notice of Default?
A Notice of Default is simply a warning sent to the homeowner stating that if he or she does not make the payments, the property will be put up for auction. A Notice of Default also includes a list of missed payments and the total amount that is owed to stop foreclosure. The total amount owed is called the reinstatement. If the homeowner fails to pay the reinstatement, the property will be listed as being foreclosed in the local newspaper.
It is important to mention that foreclosure proceedings and laws can differ from state to state.
Definition of Notice of Default: “A formal notice to a borrower declaring that a default has occurred and that legal action may be taken. “
A Notice of Default is a legal document sent to a borrower who has real property – whether undeveloped land, a home or commercial property – which property has been used as security under a mortgage or a deed of trust that said borrower is now delinquent in payments to the lender. The borrower is informed that if he or she does not pay the amount in arrears – which includes the actual mortgage payments plus late costs – then the lender may institute foreclosure proceedings on the property.
There are specific legal steps to be taken under supervision of the Foreclosure Commissioner regarding a Notice of Default determined by the locality of the property in question:
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The Notice of Default and Foreclosure Sale must be sent by certified or registered mail with return receipt requested.
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This notification must be sent to the person who is listed as the security property owner of record as existing forty-five days prior to the date which was originally set for the foreclosure sale.
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A copy of the Notice of Default and Foreclosure Sale must also be sent to those who are listed as the original mortgagor and all subsequent mortgagors on the mortgage agreement who are responsible for any portion of the mortgage loan. This, too, is based upon records existing forty-five days prior to the date originally set for the foreclosure sale.
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This notification must also be sent to any other person or persons who have any lien of record of the property in question based upon records existing forty-five days prior to the date originally set for the foreclosure sale.
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The law also requires that a copy of the Notice of Default and Foreclosure Sale must be published in a newspaper where the real property is located once each week for three continuous weeks.
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A copy of this Notice must also be posted in a prominent place located on the real property or close by. This should be done at least seven days prior to the foreclosure sale.
A Notice of Default is also applicable between a tenant and landlord. The default in this instance occurs when the tenant does not pay his or her rent on time. Most leases contain specific information relative to a Notice and Cure Provision by a tenant. Leases also specify charges for late payment of rent as well as any interest charges that will accrue.
Some landlords will allow the tenant to move out without charging any late fees and interest charges if the tenant will agree to leave without causing the landlord to incur fees for instituting legal proceedings. Other landlords have been known to keep the security deposit and any cleaning deposit that was given when the tenant moved in. Some areas provide a landlord a statutory lien which allows him or her to retain possession of the tenant’s “goods and fixtures” until such time as the tenant cures the default.
Before a landlord attempts to exercise any types of enforcement against a tenant in default, it is always wise to contact an attorney to avoid legal problems.
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