A notice of default is a statement advising the recipient that he or she has "failed to live up to a term or condition of the contract," according to Nolo's Palin-English Law Dictionary. In the state of California, a foreclosure is initiated by a lender filing a notice of default with the county recorder. How soon that occurs depends largely on the lender and the mortgage contract.
California Civil Code Section 2924 specifies what needs to be in a notice of default, but not when it can be filed. It requires the lender to describe the breach of contract that has occurred and resulted in the NOD. It also requires the lender to identify the mortgage or deed of trust and explain what steps can be taken to stop the foreclosure.
Your loan agreement, usually called a "note" or "promissory note" in the state of California, may provide further explanation of what constitutes a default. Sometimes, it simply states you are in default if you miss even one installment payment or violate any aspect of the loan agreement.
In a 2005 California Appellate Court decision, the court ruled that the breach described by the lender in the notice of default must be "substantial enough to authorize the use of the drastic remedy of nonjudicial foreclosure." Nonjudicial foreclosure is the standard foreclosure process used in California; it is essentially an administrative process made up of notices filed by the lender and leading to the sale of the property. This court ruling attempts to provide a higher standard of breach than the one missed payment sometimes mentioned in a promissory note.
While, according to RealtyTrac, a foreclosure in California can be legally accomplished in as little as 117 days, the lender servicing firm LPS reports that foreclosures in California were averaging 511 days in early 2011. When it's taking lenders that long to complete a foreclosure, you can bet it's probably taking them a while to file NODs.
- Nolo: Notice of Default
- Onecle: California Civil Code Section 2924 (see (a) (1) (C))
- ReedSmith: California Court Rules 'If Any' Wording Sinks Notice of Default; June 2005
- USALS: Promissory Note
- RealtyTrac: Foreclosure Laws and Procedures by State
- Nolo. "Federal Laws That Protect Homeowners During Foreclosure. "Accessed March 31, 2020.
- Nolo. "California Foreclosure Laws and Procedures." Accessed March 31, 2020.
- California Legislature. "CHAPTER 2.5. Home Equity Sales Contracts [1695 - 1695.17]. "Accessed March 31, 2020.
- Nolo. "Laws Prohibiting Dual Tracking in the Foreclosure Context." Accessed March 31, 2020.
- State of California Department of Justice. "California Homeowner Bill of Rights." Accessed March 31, 2020.
- National Consumer Law Center. "Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior." Accessed March 31, 2020.
Mary Gallagher runs Mary Gallagher Planning (mgaplanning.com), an urban planning and consulting business in San Francisco. She is the former assistant planning director for San Francisco and planning director for San Mateo. Gallagher has been writing about real estate, development and land use for numerous websites since 1995. She holds a master's degree in historic preservation planning from Cornell University.