Judicial Foreclosure Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Judicial Foreclosure, written in plain English, along with examples of how it is used.
What is Judicial Foreclosure?
It is a situation when the lender or the one who sues approaches court to use the law of foreclosure where if the borrower is not able to pay the loan (which was brought from the lender by mortgaging the property or asset), his/her asset is conficated and sold for repayment of principal and interest.
History and Meaning of Judicial Foreclosure
Judicial Foreclosure is a legal process in which a lender files a lawsuit against a borrower who has defaulted on a mortgage or loan. The lender, through the court system, obtains a court-ordered sale of the property to pay off the loan. This process is called foreclosure, and the foreclosure process in which it is done through the court system is called Judicial Foreclosure.
In Judicial Foreclosure, the lender must file a lawsuit in court and receive approval from a judge before they can proceed with the foreclosure process. The borrower then has a chance to respond to the lawsuit before the court makes a decision. If the court approves the foreclosure, the property is sold to satisfy the debt owed to the lender.
This type of foreclosure is used in many states throughout the United States because it offers a level of protection for homeowners against wrongful foreclosures by lenders.
Examples of Judicial Foreclosure
John took out a mortgage on his house but was unable to make payments on time. The lender filed a lawsuit in court, and the judge approved the Judicial Foreclosure of John's property. The property was then sold in a public auction, and the proceeds were used to pay off the loan.
Lisa had a car loan with a lender but defaulted on her payments. The lender took her to court, and the judge approved the Judicial Foreclosure of Lisa's car. The car was then sold, and the proceeds were used to pay off the loan.
Legal Terms Similar to Judicial Foreclosure
Power of Sale - A legal process that allows a lender to sell the borrower's property without going through the court system.
Deed in Lieu of Foreclosure - A situation where the borrower transfers ownership of the property to the lender to avoid foreclosure.
Non-judicial foreclosure - A type of foreclosure that is done without the court system, where the lender follows the foreclosure rules set up by state law.