Judicial foreclosure refers to foreclosure cases that go through the court system. Foreclosure occurs when a home is sold to pay off an unpaid debt. Many states require foreclosures to be judicial or to be processed through the state court system, but in some states foreclosures can be either non-judicial or judicial.
If the court confirms that the debt is in default, an auction is held for the sale of the property in order to acquire funds to repay the lender. This differs from non-judicial foreclosures, which are processed without court intervention.
Many states require judicial foreclosure to protect equity the debtor may have in the property. Judicial foreclosure also serves to prevent strategic disclosures by unscrupulous lenders. In instances where the sale of the property through the auction does not generate enough funds to repay the mortgage lender, the former homeowner will still be held liable for the remaining balance.
Judicial Foreclosure Process
Judicial foreclosures can last anywhere from six months to about three years depending on the state.
To begin the foreclosure process, the mortgage servicer, or the company to which mortgage services are paid, must wait until the borrower is delinquent on payments for four months. At this point the servicer will notify the foreclosing party with a breach letter, letting the debtor know they are in default on their mortgage. In most cases, the debtor then has 30 days to cure the default, and if they are not able to, the servicer will move forward with foreclosure proceedings. At this point, the foreclosing party files a lawsuit in the county where the property is located and requests the court allow the home to be sold to pay the debt. As part of the lawsuit, the foreclosing party includes a petition for foreclosure that explains why a judge should issue a foreclosure judgment. In most cases, the court will enter a judgment of foreclosure unless the borrower has a defense that justifies the delinquent payments.
Depending on the state, the foreclosing party may also be entitled to a deficiency judgment. A deficiency judgment allows the house to be sold at a foreclosure sale for less than the outstanding mortgage debt. The difference between the debt and the foreclosure sale price is called the deficiency. In most states, the foreclosing party can get a personal judgment against the borrower for the deficiency.
Missouri Quiet Title Lawsuit
A Missouri quiet title lawsuit, also called an action to quiet title or quiet title action, is most commonly used for clearing title issues, fixing defects in a title or confirming the ownership of real estate and personal property. A quiet title lawsuit is also required by most title companies after a property has been purchased at a delinquent tax sale, which is covered in part by Section 140.330 of the Missouri Revised Statutes.
Clearing Title Defects
The title defect, often called a “cloud on title,” is generally something or someone in the title history that results in the current owner holding less than perfect title, legally referred to as fee simple title. Corrections to the chain of title or clearing a title issue could be necessary because:
• A document was not recorded in the Recorder of Deeds Office, but should have been.
• A document was improperly recorded.
• The recorded document itself contained errors.
If the only title issue is a recorded document containing an error, and that error is based on a mutual mistake, a reformation action may be the preferred lawsuit. Also, a quiet title lawsuit is not appropriate where the true and correct owners of a property do not agree on the use of the property or whether to sell the property. In that situation, a partition lawsuit is the preferred legal action.
Quiet Title Attorney
Section 527.150 of the Missouri Revised Statutes provides the statutory authority to file a quiet title suit. This process requires that the individual or entity filing the lawsuit file a petition with the circuit court of the county where the property is located. A lis pendens is then recorded in the recorder of deeds office to ensure that anyone looking at the chain of title knows a lawsuit has been filed concerning the title to this property.
In states other than Missouri, a quiet title lawsuit may be called a try title lawsuit, trespass to try title lawsuit or ejectment action.