The Notice of Default Process

Posted on May 4, 2007. Filed under: Home Buyers, Home Sellers |

THE NOTICE OF DEFAULT PROCESS – nonjudicial foreclosures

(homeowners & association members)

Foreclosure proceedings are initiated with a Notice of Default or (N.O.D.).  The Notice of Default is recorded at the request of the lender by the trustee which, in effect, gives notice to the public that the loan is in default.  The actual recording of the notice takes place at the County Recorder’s Office in the county in which the property is located.  It denotes essential data pertaining to the trust deed, the amount it arrears, address of the property, and the date of recording.

In the state of California, the trustor (Borrower) has ninety days from recordation of the notice of default to reinstate the loan (to make the loan current by paying all payments in arrears, any late charges, or other deficiencies).  The law requires the lender to accept the trustor’s reinstatement money during this ninety day period.

The following represents, in summary, the assessment lien and nonjudicial foreclosure process.  The “Pre-Lien” notice is required pursuant to Civil Code Section 1367.1(a).  This Code Section also requires that the minimum time period between the mailing of the “Pre-Lien” notice to the member and the recordation of a Notice of Delinquent Assessment (“Lien”) is 30 Days.  Civil Code Section 1367.1 (g) requires a minimum time period of 30 Days between the recording of a Lien and the recording of a “Notice of Default” which begins the nonjudicial foreclosure process.  The minimum time period for the nonjudicial foreclosure process is three months plus three weeks for publication as set forth in Civil Code Section 2924.

Pre-Lien Notice (Association Members)

With the passage of Assembly Bill 1317 in 1996, a pre-lien notice is required to be sent to a member who is delinquent in the payment of membership assessments.  This notice must include an itemized statement of the assessments, late charges and collection costs charged to the member’s account, describe the procedures used by the association to collect delinquent assessments and certain prescribed disclosures.  The pre-lien notice must be mailed, by certified mail, to all owners at their last known address and before the recording of a Notice of Delinquent Assessment.  With the passage of Assembly Bill 2289 om 2002, the minimum time period between the mailing of the “pre-lien” notice to the member and the recordation of a Notice of Delinquent Assessment (“Lien”) is 30 Days (effective January 2003). 

Notice of Delinquent Assessment (Association Members)

The Notice od Delinquent Assessment, when recorded, creates a “Lien” on a property.  This Lien represents a claim against the real property of the delinquent member.  In additio to any requirements specified in the association’s CC&Rs, the Notice of Delinquent Assessment must include the legal description of the subject property, a detail of the assessments, late charges, interest and costs of collection, the names of all of the record owners and, if the Lien is to be enforced by nonjudicial foreclosure, the name and address and the appointed trustee.  A copy of the Lien must be sent, by regular first class and certified mail, to the owners of the property to their last known address.  This mailing must occur no later than 10 Days from the recording of the Lien.  An affidavit or declaration of mailin gmust be completetd and maintained in association files to evidence compliance with this mailing requirement.

Notice of Default

After the expiration of 30 Days from the recording of the Notice of Delinquent Assessment and, absent receipt of payment of all amounts owed to the association, the trustee will prepare a Notice of Default and Election to Sell.  The official beginning of the “Trustee’s Sale Proceeding” (nonjudicial foreclosure) occurs when the Notice of Default is recorded by the trustee at the county recorder’s office.

There are several parties entitled to receive a copy of the Notice of Default.  The Trustee will mail a copy of the notice within 10 days after recording to the record owners and all persons who have recorded a “Request for Notice”.  Further, the trustee will send notice to other parties having an interest in the property within 30 Days as required by law.

At the time the trustee records the Notice of Default, a “Trustee’s Sale Gaurantee” (TSG) is purchased from a title company.  The TSG is a type of insurance policy which provides the trustee with certain information that is needed to properly conduct a nonjudicial foreclosure and insures the homeowners association and the trustee in the event the information is incorrect or incomplete.

If you have any questions or comments, post your comment, or contact me via my website.  I would be pleased to hear from you. – Visit my Blog’s Homepage!


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