Foreclosures For Sale Updated On: 03/18/10
Alabama Foreclosure Laws
Alabama Foreclosure Laws
Alabama is commonly referred to as a title theory state wherein the title of the property stays in assurance till the loan amount is paid off in full. A mortgage or a deed of trust, are documents which keep the title protected.
A mortgage, in Alabama, can be used in place of a deed of trust as they perform the same role in a non-judicial foreclosure.
Alabama primarily follows a non-judicial foreclosure method. A power of sale clause which is usually included in the mortgage on the onset is used by an attorney when a homeowner defaults, to foreclose upon the property and to take care of the loan that has been defaulted upon.
With this being a non-judicial recourse, very strict requirements for notices, and the inclusion of the power of sale clause in the mortgage is required to pursue this method of foreclosure. The sheriff conducts the auction.
A notice of sale that indicates pending foreclosure must be obtained and filed by the attorney before initializing the foreclosure process. A notice of foreclosure sale date must be published in a newspaper which is circulated in the county in where the property is, for a period of three weeks. If the county in question does not have such a newspaper, one from a neighboring county can be used.
If a borrower makes the payment including the fees and costs before the foreclosure sale, the foreclosure process shall stop.
The auction is conducted by the sheriff and goes to the highest bidder; this could be the lender too. The auctions usually take place in between 11:00 and 16:00 hrs; however, it can be postponed day-to-day by the sheriff.
Lenders in Alabama can also opt for a judicial foreclosure process through a court, where the foreclosures final judgment is pronounced by the court. The sheriff then sells the property at a publicly announced sale. A lis pendens, which is a document that is used to announce publicly the foreclosure on the property, along with a complaint, needs to be filed in the court.
The document used is referred to as the mortgage, or a security agreement in the case of commercial transactions. At times, the security agreement is merged with the mortgage. The filing of a mortgage is required to substantiate the loan in question and repayment terms, which the note includes.
Depending on the time required for various notices, a non-judicial foreclosure usually takes around sixty to ninety days to come into effect, if uncontested. If a borrower chooses to contest the foreclosure in court asking for the sale to be adjourned, or if bankruptcy is filed for, the process could be delayed.
A statutory right of redemption exists in Alabama. If, within a period of twelve months of the sale, a borrower is able to pay the total amount on the un-paid loan including costs, then the borrower has a right to reclaim the property that had been foreclosed upon.
A right of redemption is not provided in a Deed in Lieu of Foreclosure and nor is a deficiency statement.
If a property sells for less than the outstanding amount on the loan in question at the public auction sale, then a deficiency statement can be obtained by a lender.
Laws governing foreclosures in Alabama are part of the Alabama Code (1975). Sales of foreclosures come under Title 35 (Property) Articles 1, 1A, 2, 3 §35-10-1 et. seq. (Powers Contained in Mortgages, Foreclosure by Power of Sale).
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