What Is a Default Notice

In real estate, a default notice is a piece of document that is filed with a court and sent to a person who borrowed money for property purchase, notifying that he or she is behind in payments. Typically, the borrower is given a certain number of days to make payment, the amount of which will include legal fees.

Basically, this type of notice is the first step towards foreclosure and is recorded at the recorder’s office of a state. When you take out a loan in a state where the lender can declare foreclosure without going through court (a non-judicial foreclosure state), the mortgage or trust deed that you sign will typically contain a “power of sale” clause.

This gives the trustee, which is the one managing the foreclosure process, the right to put the property up for sale if you fail to make repayments. In accordance with most state laws in the US, the trustee will prepare and file a sale notice for the property. However, if you can catch up on your payments, the trustee will then stop the foreclosure process.

Generally speaking, borrowers in the US would receive both a default notice and sale notice. However, this still depends on what the law of the state stipulates.

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