What Is the Procedure for Courthouse Property Auctions?

When a borrower does not make payments on a property that is collateral on a loan, and if that property is not sold in the pre-foreclosure period, the property will be foreclosed on by the lender, and will normally be sold at a courthouse property auction.

Step One

In order to reach the courthouse property auction, several things must be done: first, the lender must file a lawsuit with the court announcing that the owner of the property has defaulted on the loan.

Step Two

The property must then be advertised for public auction. This is usually in the classified section of the local paper, and will run once a week for three to four weeks.

Significance

The property is, after the previous steps, ready for the auction. On the stated day and the stated time, the auction takes place on the courthouse steps.

Features of the Auction

The lender that has foreclosed has the first bid for the unpaid amount of the loan. Often, there are no other bidders, but if there are, the bidders usually have to have a cashier's check or a letter of credit from their bank.

Effects

After the auction, the winning bidder takes possession of the property. If that is the lender, the property is sold, and the former borrower is liable for any balance left unpaid by the sale.