Notice Of Default Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Notice Of Default, written in plain English, along with examples of how it is used.

What is Notice Of Default?

It refers to the communication to the someone (usually borrower) in form of notice, informing him/her that they have defaulted the terms of the contract or agreement and a legal action can be taken against him/her.

History and Meaning of Notice Of Default

Notice of Default is a formal notice given to a party that has failed to comply with the terms and conditions of a contract or an agreement. As per this notice, the recipient of the notice will need to take appropriate corrective measures to make the situation right or face legal actions. This term is most commonly used in the context of real estate, particularly for home mortgage borrowers, where they may be notified of defaulted payments or failure to meet other contractual obligations.

The Notice of Default, or NOD, is a critical step in the foreclosure process, allowing the lender to begin the foreclosure proceedings. This notice outlines the details of the borrower’s default on their mortgage payments, including their rights to cure the default and avoid foreclosure. Once the borrower has received the notice, they are required to take corrective action, typically within a specific period, or face legal action.

Examples of Notice Of Default

  1. A borrower has missed three consecutive mortgage payments. The lender then sends a Notice of Default notifying the borrower of their default on the mortgage and outlining the necessary corrective actions to remedy the situation.

  2. A tenant has breached the terms of their rental agreement by subleasing the apartment without the landlord's consent. The landlord sends a Notice of Default to the tenant, demanding that they immediately cure the default or face eviction.

  3. A credit card holder has failed to make the minimum payment for several months in a row. The credit card company sends a Notice of Default providing notice of the default, outlining the dispute resolution procedures, and warning of potential legal action if the situation is not remedied.

Legal Terms Similar to Notice Of Default

  1. Foreclosure: the legal process through which a lender sells or repossesses a property due to non-payment by the borrower.

  2. Eviction: the removal of a tenant from a rental property by a landlord for a breach of the rental agreement or other lease violations.

  3. Repossession: the process by which a creditor takes back a property, such as a car or other assets, from a borrower who has defaulted on their loan.