What does power of sale provision mean?
A power of sale is a clause written into a mortgage note authorizing the mortgagee to sell the property in the event of default in order to repay the mortgage debt.
Power of sale is permitted in many states as part of a lender’s rights to seek a foreclosure..
What is the difference between foreclosure and power of sale?
In the Foreclosure process, the lender is able to take title to the property. This is different from Power of Sale, where the lender only has the right to sell the property. With Foreclosure the lender must sue the borrower in court and wait for the courts to issue judgment.
What triggers a due on sale clause?
Inheritance: If the borrower dies and a relative inherits and occupies the home, the relative cannot be forced to pay off the remaining mortgage balance on demand. However, if the heir chooses not to occupy the home, the transferred title can trigger the due-on-sale clause.
Do most mortgages have a due on sale clause?
Virtually all mortgage loans made in the United States by institutional lenders in recent years contain a due-on-sale clause. These clauses are meant to require the loan to be paid in full in the case of a sale or conveyance of interest in the subject property.
How does power of sale work?
Power of sale allows a lender to sell the mortgaged property and recover their investment. This is different from foreclosure, where the lender takes title to the property. In power of sale, the lender has the right to evict the homeowner and sell the home to pay off the mortgages on the property.
What is the function of recording a deed?
When you get the deed, you should record it with the county recorder in the county where the property is located. The purpose of recording the deed is to give “notice to the world” that you now have an ownership interest in that particular piece of real property. Recording also tracks the chronological chain of title.