Quick Facts
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust,
Mortgage
- Timeline: Typically 120 days
- Right of Redemption: Varies
- Deficiency Judgments Allowed: Varies
In Arkansas, lenders may foreclose on deeds of
trusts or mortgages in default using either a judicial or
non-judicial foreclosure process. However, an appraisal of the
property must be made prior to the schedule date of foreclosure.
In any foreclosure under a mortgage or deed of
trust in Arkansas, the property must sell for not less than
two-thirds of the appraised value. If it does not, then it may be
offered for sale again within twelve (12) months. The second sale
may be to the highest bidder without reference to the previous
appraisal.
Judicial Foreclosure
In judicial foreclosure, a court decrees the
amount of the borrowers debt and gives him or her a short time to
pay. If the borrower fails to pay within that time, then the clerk
of the court, as commissioner, advertises the property for sale.
Sales of real property under court order will be
on a credit of not less than three (3) months, but not more than six
(6) months, or on installments to not more than four (4) months
credit overall. To secure payment, a lien will be retained on the
property for its price and the purchaser must also give a bond with
surety for the amount of the purchase price.
The lender may bid at the sale by crediting a
portion (or all) of the amount the court found was owed to the
lender against the sales price of the property purchased at the
foreclosure sale. If the real estate does not sell for an amount
equal to what’s due on the mortgage loan, then the lender may seize
other property from the borrower as in an ordinary judgment.
The borrower has one (1) year from the date of the
sale to redeem the property by paying the amount for which the
property was sold, plus interest.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used
when a power of sale clause exists in a mortgage or deed of trust. A
"power of sale" clause is the clause in a deed of trust or mortgage,
in which the borrower pre-authorizes the sale of property to pay off
the balance on a loan in the event of the their default. In deeds of
trust or mortgages where a power of sale exists, the power given to
the lender to sell the property may be executed by the lender or
their representative, typically referred to as the trustee.
Regulations for this type of foreclosure process are outlined below
in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure
Guidelines
If the deed of trust or mortgage contains a power
of sale clause and specifies the time, place and terms of sale, then
the specified procedure must be followed. Otherwise, the
non-judicial power of sale foreclosure is carried out as follows:
The trustee must record a notice of sale in the
office of the recorder of the county where the property is located.
The mortgagee's or trustee's notice of default and intention to sell
shall be mailed within thirty (30) days of the recording of the
notice by certified mail to the borrower. This includes any borrower
of record or of whom the lender has actual notice. The notice must
also be mailed to anyone who records a Request for Notice that
specifically described the mortgagee including its recording
information.
Within five (5) days after the notice is recorded,
the trustee must mail, by certified mail, a copy of the notice of
sale to each of the people who are parties to the trust deed, except
for himself. Additionally, the notice of default and intention to
sell must appear in a newspaper in the county where the property is
located once a week for four (4) consecutive weeks, with the last
notice being published not less than ten (10) days prior to the date
of the sale.
Said notice of default and intention to sell must
contain the names of the parties to the mortgage or deed of trust, a
legal description of the trust property and, if applicable, the
street address of the property, the book and page numbers where the
mortgage or deed of trust is recorded or the recorder's document
number, the default for which foreclosure is made, the mortgagee's
or trustee's intention to sell the trust property to satisfy the
obligation, including, in conspicuous type, a warning as follows:
"YOU MAY LOSE YOUR PROPERTY IF YOU DO NOT TAKE IMMEDIATE ACTION" and
the time, date, and place of sale.
Any person including the mortgagee (lender) may
bid at the sale, except the trustee, who may bid on the behalf of
the beneficiary (lender) but not for himself or herself in deed of
trust sales. The high bidder must pay the price bid at the time of
sale, or within ten (10) days. The lender may bid by canceling out
what it is owed on the loan, including unpaid taxes, insurance,
costs or sale and maintenance, but for cash for any higher price.
The trustee may postpone the sale by public
proclamation at the time, place and date last appointed for sale, up
to seven (7) days past the original date, but if for a longer time,
then the whole notice procedure must be performed a second time,
including the sixty (60) day wait.
Once the sale is complete, the proceeds will go to
the pay for the expenses of the foreclosure sale, then toward the
obligations secured by the trust deed that was foreclosed and then
to junior lien holders in order of their priority. The original
borrower is entitled to receive any remaining funds. The successful
bidder receives a trustee’s deed.
The lender may sue the borrower for a deficiency
within twelve (12) months of a power of sale clause foreclosure. The
lender may sue for (1) the difference between the foreclosure sale
price and the balance due on the loan, or (2) the balance due on the
loan minus the fair market value of the property, whichever is less.
More
information on Arkansas foreclosure laws
