Non-judicial foreclosures are done based on compliance with the requirement established by state statutes. Most states have their own statutes governing foreclosure of properties, which are given as guarantee for loans. A non-judicial foreclosure cannot be executed summarily. There are certain procedures that must be followed based on the statutes of the state concerned. The very basic rule is that a property given as security for a loan can only be foreclosed in the event of default on payment of the loan.

How can a creditor foreclose the property of the debtor, which is given a security of the loan? First, upon default of payment of the loan, the creditor must send a default letter to the debtor or homeowner. The notice can be served personally or through mail. In many states across the United States, a Notice of Default should also be recorded with the proper authorities at the same time the notice was sent to the debtor or homeowner. In the event that the debtor or homeowner does not pay the loan and cure the default, a Notice of Sale will be sent to the debtor or homeowner. A Notice of Sale will also be recorded with the county recorder’s office and at the same time, the notice will be published in area legal publications.

Most States have a legal period required before the property could be sold in a public auction. It is important that this legal period should be allowed to lapse before the property is auctioned to avoid any legal and technical impediments in the future.