If a borrower of a mortgage defaults on their monthly payments, the lender uses a legal process to initiate the sale of the property to recover the balance owed on the property. That is when the property is said to have entered foreclosure.
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Now, the lender can choose to foreclose on the property by filing a lawsuit in court, making it a judicial foreclosure or choosing to bypass court proceedings with a nonjudicial foreclosure. Whether a property will be foreclosed on through a judicial or a nonjudicial process depends on the state the property is in. In both cases, the last stage in the foreclosure process is a foreclosure sale.
In states where home loans are secured by a mortgage, the process tends to take the judicial route, whereas states where they are secured by a deed of trust follow a nonjudicial process.
How Judicial Foreclosure Sales Work
A judicial foreclosure involves the court system, where a lender files a lawsuit to commence the foreclosure process.
A sheriff, judge, or other court official is usually appointed to oversee a live auction which is often held inside the courthouse or on its steps. Some counties may also offer the option of online bidding. These properties that are going through the foreclosure process and are not yet fully foreclosed upon are still referred to as “foreclosures” at public sales.
If no one bids at the auction or if no bids reach the asking amount, the property is subsequently sold back to the bank and becomes a bank-owned (also known as Real Estate Owned or REO) property.
How Non-Judicial Foreclosure Sales Work
In nonjudicial states, if the homeowner fails to comply with the terms of their loan, a trustee or auctioneer is authorized to foreclose on it. The steps in the foreclosure process, such as how much notice the trustee must give the homeowner and how the house will be sold, are set forth under state law.
A notice of intent to sell the property on a specified date will be sent to the homeowner if they are unable to make the payments or arrange a payment plan with the lender.
These auctions may take place at the property, at a convention center or ballroom, or on the steps of the courthouse. At the auction, the house is sold back to the bank and becomes bank-owned property if no one places a bid higher than the credit bid, or the minimum amount that must be exceeded to win the property.
How Long Do Judicial and Nonjudicial Foreclosures Take?
The timelines of judicial and nonjudicial foreclosures differ too. A judicial foreclosure process can take several months or even years from the initial notice to the auction, even though sometimes it can take as little as three and a half months. It especially takes longer if the homeowner files a response to the foreclosure summons and complaint and prolongs the court’s ruling. In some states, homeowners are still able to purchase their property during a redemption period that ends following the foreclosure sale.
Nonjudicial foreclosures may happen over a much shorter timeline, often a few months, because the process does not involve the court to auction off the property. In Georgia, for example, the entire process may take less than 37 days.
Foreclosure Procedures by State
The easiest way to find out whether the state typically follows a judicial or nonjudicial process is to check with the local county administration. While some states permit both, they usually adhere to one or the other. Below is a chart by state, indicating which process(es) each uses. This chart is for informational purposes only. To find out the procedure your state uses, consult a qualified real estate professional or attorney, or get in touch with the county administration in your area.
| State | Judicial (Mortgages) | Nonjudicial (Deeds of Trust) |
| Alabama | ✓ | ✓ |
| Alaska | ✓ | ✓ |
| Arizona | ✓ | ✓ |
| Arkansas | ✓ | ✓ |
| California | ✓ | ✓ |
| Colorado | ✓ | ✓ |
| Connecticut | ✓ | |
| Delaware | ✓ | |
| Florida | ✓ | |
| Georgia | ✓ | ✓ |
| Hawaii | ✓ | ✓ |
| Idaho | ✓ | ✓ |
| Illinois | ✓ | |
| Indiana | ✓ | |
| Iowa | ✓ | ✓ |
| Kansas | ✓ | |
| Kentucky | ✓ | |
| Louisiana | ✓ | |
| Maine | ✓ | |
| Maryland | ✓ | ✓ |
| Massachusetts | ✓ | ✓ |
| Michigan | ✓ | |
| Minnesota | ✓ | ✓ |
| Mississippi | ✓ | ✓ |
| Missouri | ✓ | ✓ |
| Montana | ✓ | |
| Nebraska | ✓ | ✓ |
| Nevada | ✓ | ✓ |
| New Hampshire | ✓ | ✓ |
| New Jersey | ✓ | |
| New Mexico (sometimes) | ✓ | |
| New York | ✓ | |
| North Carolina | ✓ | ✓ |
| North Dakota | ✓ | |
| Ohio | ✓ | |
| Oklahoma | ✓ | ✓ |
| Oregon | ✓ | ✓ |
| Pennsylvania | ✓ | |
| Rhode Island | ✓ | ✓ |
| South Carolina | ✓ | |
| South Dakota | ✓ | ✓ |
| Tennessee | ✓ | ✓ |
| Texas | ✓ | ✓ |
| Utah | ✓ | ✓ |
| Vermont | ✓ | |
| Virginia | ✓ | ✓ |
| Washington | ✓ | ✓ |
| Washington D.C. | ✓ | ✓ |
| West Virginia | ✓ | |
| Wisconsin | ✓ | |
| Wyoming | ✓ | ✓ |
Every serious real estate investor venturing into the foreclosures market should be aware of the differences between the two types of foreclosure proceedings. Having this knowledge will let you prepare for the live auction and avoid any delays in bidding.
