Define: Power Of Sale Clause

A power of sale clause is a provision included in a mortgage or deed of trust that gives the lender the right to sell the property in the event of default by the borrower.

If the borrower fails to make the required mortgage payments or breaches any other terms of the loan agreement, the lender can initiate the power of sale process. This typically involves giving notice to the borrower, advertising the property for sale, and conducting a public auction.

The purpose of a power of sale clause is to provide the lender with a quicker and less expensive method of recovering the outstanding loan balance in the event of default, compared to going through a judicial foreclosure process.

Yes, in most cases, a power of sale clause allows the lender to enforce the foreclosure process without involving the court system. However, certain legal requirements and procedures must still be followed.

Yes, a borrower can challenge the enforcement of a power of sale clause if they believe that the lender did not comply with the legal requirements or if they have valid defences against the foreclosure.

Generally, a power of sale clause is a standard provision in mortgage agreements. However, it may be possible to negotiate its removal or modification with the lender before entering into the loan agreement.

After deducting the costs of the foreclosure process, the remaining proceeds from the sale are typically used to pay off the outstanding loan balance. Any surplus may be returned to the borrower, depending on the jurisdiction’s laws.

The ability to redeem the property after a power of sale foreclosure depends on the laws of the specific jurisdiction. Some jurisdictions allow for a redemption period, during which the borrower can repay the outstanding debt and reclaim the property.

Yes, power of sale clauses can be used for both residential and commercial properties. The specific terms and procedures may vary depending on the type of property and the jurisdiction.

Yes, in some cases, a lender may choose to pursue a judicial foreclosure instead of utilizing the power of sale clause. This involves filing a lawsuit and obtaining a court order to foreclose on the property. The specific circumstances and applicable laws will determine the available options.