Foreclosure Process in Alabama

by : Kathy Swift

The state of Alabama allows for both judicial or in-court and non-judicial or out of court foreclosures.  As with all states where both choices are available to the lender, the determining factor as to which process will be followed, is the power of sale clause.  If the mortgage or deed of trust contains a power of sale clause, this allows the bank to skip over the step of obtaining the courts permission to foreclose.  This of course saves the bank both time and money.  Since it is in the banks best interest to spend less and move more quickly to the sale of the home, out of court foreclosure will be used whenever it is allowed.

The only situation in which judicial foreclosure would be used is when the bank cannot foreclose any other way.  When no power of sale clause exists in the mortgage or deed of trust, then the bank must use the court system to move ahead towards the sale of the house.

To foreclose through the court system, the bank must file a law suit against the homeowner who is having trouble keeping current on their house payments.  The object of this lawsuit is to have the court officially declare the homeowner in default and obtain a court order to foreclose.  Once this has been obtained by the bank’s lawyer,  the steps of moving toward the sale of the house remains the same for both in court and out of court processes. 

Sometimes the power of sale clause is so detailed in its instructions as to how the sale must be carried out, that it will state how, when and where the foreclosure sale will occur.  When this is the case, then these instructions must be followed.  Most power of sale clauses are not so complete in their instructions and the ususal method of foreclosure method of foreclosure will be followed in this state will be followed from this point on.

The notice of sale announcing the upcoming auction of the home must be run or published in a paper with circulation in the county where the home is located.  The last of these ads announcing the foreclosure sale has to be run no less than thirty days prior to the scheduled sale date.  If the property in foreclosure is located in more than one county, the ad or notice of sale must be run in all counties where it is located.  This notice of sale must include the date, and time and location of the sale.  The sale is almost always held in front of the main doors of the county courthouse in the county in which the home is located.  The notice of sale must also describe the property and the terms of the sale. 

The home will be offered to the person making the highest bid at the auction the winning bidder must be prepared to pay cash for the total amount of their offered bid price at the conclusion of the sale.

In regards to the publication of the notice of sale in a local paper, if there is no paper with general circulation in the county where the home is located, the banks lawyer must run the notice of sale in a paper with circulation in the nearest adjoining county.  This ad must be run for four consecutive weeks.

The home owner has the right to stop the foreclosure by paying off the full amount of the debt up until the day before the scheduled foreclosure sale.  Foreclosures move very quickly in this state with the average time frame being between 47 to 79 days. The right of redemption period is three hundred and sixty five days. This means that if the former homeowner wishes to regain ownership of the property they can do that for one year.  The cost of this option is what the house sold for at auction.

Integrity 1st Consulting is your specialist- Kathy Swift