What Is the Power of Sale Clause in Foreclosure?

What is the Power of Sale Clause in Foreclosure


A power of sale clause is included in most deed of trust mortgages. It lets a trustee proceed with a non-judicial foreclosure if you default on mortgage payments. In short, this enables foreclosure without going to court. About half of U.S. states allow for non-judicial foreclosure, which is a faster and less costly process for lenders.

What Is a Deed of Trust?

A legal agreement recognized by the state, it serves as a security for a mortgage loan. It is made when the property is closed upon. When a promissory note is tied to a deed of trust, the trustee can proceed with a nonjudicial disclosure when a lender defaults on payments.

 Power of Sale Foreclosure Process

Power of sale foreclosures proceeds depending on individual states’ statutes. While each state has different requirements, the process begins when the borrower defaults on their loan. The lender can then provide limited notice by notifying the homeowner of the pending foreclosure. A trustee can then sell the property, but the lender must follow strict procedures. There’s also a timeline of notifications and waiting periods pertaining to a power of sale foreclosure.

The process is governed by various rules and regulations, including:

  • Right of Redemption: You can reclaim a home before the lender puts it up for auction once you repay debts, and cover additional fees, and interest payments.
  • Legal Action: You can file a lawsuit if you believe the property was wrongfully taken, pursuant to the laws of the state your property is located.
  • No Deficiency Judgement: The lender cannot enter a delinquency judgment on your record following power of sale foreclosure.

If you file a lawsuit, you can request a judicial review even though the court does not oversee a power of sale foreclosure. As a lender, you can pursue legal action if there’s an issue with the property title, or security instrument, or want to request a deficiency judgment.

Disadvantages of the Power of Sale Foreclosure Process

A power of sale is conducted expediently. This means you can lose your property in just a few months. You must also file your own lawsuit to get a court to hear your side of the story. Contesting a foreclosure means paying filing and other fees. Also, notification rules vary by state. In some states, you might get a notice of default prior to a notice of sale, while in others you might just get a notice of sale or only a notice of publication and posting.

Power of sale is beneficial for lenders because it expedites the foreclosure process. Mortgage loan issuers can therefore save on costs related to foreclosing on a home.


Contact OakTree Law If You Need a Foreclosure Attorney


Our Los Angeles foreclosure lawyers are familiar with the entire foreclosure process, including when your deed of trust contains a power of sale clause. Whether you’ve defaulted on a mortgage loan, a lender has put a lien against your home, you’ve been denied a request for a loan modification, your mortgage is underwater, or you can’t afford your current housing costs, we can help. We offer many solutions to help restore your financial freedom. The foreclosure process can be stopped with loan modification, Chapter 7 bankruptcy, short sale negotiation, mortgage litigation, or a deed in lieu of foreclosure. To get started and receive your free evaluation, call 888-348-2609 today.