Is the foreclosure process the same for a private deal?

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Is the foreclosure process the same for a private deal?

My parents and I are buying a house from a “friend” that holds the deed to the house. We feel that it would cost too much for us to repair all the problems and just want to get out. Can we still be foreclosed on by the friend or is it different because we signed a personal contract?

Asked on July 3, 2011 under Real Estate Law, Arizona

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The term foreclosure refers to the legal process of losing of possession over your home in case of defaulting payments under a mortgage, deed of trust or the like. Under such conditions the lender has the right to foreclose on your property and sell it so that they can use the proceeds to recoup the their money.

The lender can be either a mortgage lender or other such commercial enterprise or, as in your case, a private lender. So long as a note and security instrument (mortgage, deed of trust) have been validly executed, a property so secured can be foreclosed upon. The specifics of the process are governed both by the terms of the security instrument and state law.

Before executing any documents, a real estate attorney should be consulted.


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