Define: Judicial Foreclosure

A foreclosure which results from a court action rather than from the power of sale given to a trustee. Judicial foreclosures occur when a trust deed or mortgage deed does not have a power of sale clause, thus compelling the lender to take the borrower to court. This is in contrast to a non-judicial foreclosure, in which a foreclosure can be completed outside the court system.

A judicial foreclosure occurs when a lender involves the courts to get a foreclosure on a mortgage or deed of trust.

Following a judicial foreclosure is the forced sale or auction of the property so that the debt may be repaid. A judicial foreclosure occurs in lieu of a power of sale: if the deed is lacking a power of sale clause, the lender has no choice but to take the borrower to court and invoke a judicial foreclosure. Once the court has ordered a judicial foreclosure, the value of the property is appraised, and the court determines an upset price which all bids must exceed. Often, a judicial foreclosure is used to get a “deficiency judgment” for any remaining amount after a non-judicial foreclosure. Depending on the state, a judicial foreclosure can be a faster and less expensive method of foreclosure than any alternative method.

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This glossary post was last updated: 29th March, 2024.