Quick Alabama Fact Summary
– Judicial Foreclosure Available: Yes
– Non-Judicial Foreclosure Available: Yes
– Primary Security Instruments: Deed of Trust, Mortgage
– Timeline: Varies by Process; Typically 30 – 60 days
– Right of Redemption: 12 months
– Deficiency Judgments Allowed: Yes
In Alabama, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. However, when no power of sale is current, lenders may, at their option, choose to forego a lawsuit and foreclose by selling the property, as outlined below in the “No Power of Sale Foreclosure Guidelines.”
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage in which the borrower pre-authorizes the sale of the property to pay off the balance of the loan in the event of their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines.”
Power of Sale Clause
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place, and terms of sale, then the specified procedure must be followed. However, suppose the deed of trust or mortgage contains a power of sale clause but does not specify the time, place, and terms of sale. In that case, a foreclosure sale may occur at the front or main door of the courthouse in the county where the property is located for cash to the highest bidder. The deal may not happen until thirty (30) days after the last notice of sale is published.
Notice of Sale And Publication
Said notice of sale must be given by publication once a week for four (4) successive weeks in a newspaper published in the county or counties in which the property is located. If the property is under mortgage in more than one county, the publication must be made in all counties where it is located. The notice of sale must give the time, place, and terms of said sale, together with a description of the property. If no newspaper is published in the county where the lands are located, the notice shall be placed in a newspaper published in an adjoining county for four (4) successive weeks.
Highest Bidder
If no power of sale is contained in a mortgage or deed of trust, the lender, or any assignee thereof, may, after a default of the mortgage or deed of trust, either file a lawsuit to foreclose or foreclose by selling the property to the highest bidder for cash at the courthouse door of the county where the property is situated.
No Lawful Notice No Sale
Said sale might not take place until after notice of the time, place, terms, and purpose of the sale has been published for four (4) consecutive weeks in a newspaper published in the county wherein said lands or a portion thereof is situated.
