judicial non-judicial foreclosure states list map

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Years ago, when I started using owner financing to sell my properties, it took a lot of time for me to figure out how it all worked.

After navigating through my first few deals and asking a lot of questions of various attorneys and title companies in my area, I finally felt like I understood what I was doing (what documents I needed to use, what language should be included, what I needed to do if my borrowers stopped paying, etc).

But when I started doing deals in a new state, and I was surprised to learn that many of the things I had learned in state #1 didn’t apply in state #2. There was a whole new set of rules about what documents I needed to use and how the foreclosure process would work if my borrower defaulted on their payments.

One of the big differences I saw was what type of loan instrument I needed to use.

Another big variation was how the foreclosure process worked. Some states were known as judicial foreclosure states, while others were known as non-judicial foreclosure states.

Judicial Foreclosure and Non-Judicial Foreclosure: What’s the Difference?

Non-judicial foreclosure is a process that allows the lender to foreclose on the property without involving the courts. When a borrower misses their payments, the lender’s first step is to issue a notice of default, so the borrower is fully aware that they need to make their payment if they want to keep their property. At the same time, this notice is also recorded as a public notice of the borrower’s past due status.

When this notice of default is issued, it effectively starts a time clock for the borrower to pay as agreed in order to avoid legal recourse from the lender. If the stated deadline in the notice of default passes and the borrower has not cured the default, the lender can proceed with a court action to foreclose on the property (in a judicial foreclosure state) or their trustee can sell the property at auction (in the case of a deed of trust in a non-judicial foreclosure state).

In a judicial foreclosure, the foreclosure is processed through the court system, which means there will be judicial oversight of the process, additional costs involved, and sometimes a longer period of time to get the job done. The defaulting borrower also has an opportunity to raise any defenses they may have without having to file their own court case.

Why Does It Matter?

If you’re financing a real estate transaction (whether you’re the owner offering seller financing, a hard money lender, a conventional lender, or otherwise), you’re probably going to take that property as collateral to protect yourself if that borrower ever stops paying.

But when it comes time to actually foreclose on that property so you can recoup your losses, the process in a non-judicial foreclosure state can look very different from a judicial foreclosure state. Non-judicial foreclosures are typically more straightforward and allow the lender to manage the process in-house, whereas judicial foreclosures involve a bit more red tape, time, and legal costs.

If you want to know which states will make foreclosure easy and which states will make it harder, a big component of this hinges on whether the state allows for a non-judicial foreclosure.

State-by-State Map: Which States Are Judicial vs. Non-Judicial?

As I spent many hours doing state-by-state research throughout the U.S., my goal was to find no less than three external sources that all clearly agreed about how each state’s foreclosure process worked.

One interesting thing is that, in every state that allows lenders to use a non-judicial foreclosure process, it also allows a judicial foreclosure if the lender’s loan documents didn’t include the “power of sale” clause giving them the right to pursue a non-judicial foreclosure.

The states to watch out for are the judicial foreclosure states, which basically force any foreclosure to go through the court system. 

AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY DC

Legal Disclaimer: The information on this map was pulled from several sources, both online and offline. If you want to explore the sources we used, each one will be linked within each state. This map isn’t intended to be the authoritative answer on how each state works, but simply the most educated assessment we could make based on the information we were able to gather. If you have evidence to show that our assessment is incorrect in any particular state, feel free to contact us and point out any sources to support your claim.

Sources

As I mentioned above, we referenced A LOT of other sources to support and verify the statements above. In most cases, every source of information we could find was in agreement with one another. However, there were a few that seemed to have some contradictions (New York, Wisconsin, and Vermont were a few such examples). As always, this list isn’t intended to be a definitive or authoritative source of information, it just represents the answers we found for each state. Always do your own research and seek legal counsel for your own situation before you take action.

Here’s the full list of sources we used for each state.

About the author

Seth Williams is the Founder of REtipster.com - an online community that offers real-world guidance for real estate investors.

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