Arkansas Foreclosure Laws
Judicial Foreclosure Available: Yes
Non-Judicial Foreclosure Available: Yes
Security Instruments: Deed of Trust, Mortgage
Right of Redemption Period: Judicial Foreclosure Only – 12 Months
Deficiency Judgments Allowed: Non-Judicial Foreclosure Only
Public Notice: Complaint
Arkansas is moving toward becoming a title state, in which a property title would remain in trust until the loan satisfied in full. The state used to operate primarily through the judicial foreclosure method under the lien theory (property acts as security for the loan and title to the property is under the borrower’s name), but currently, both judicial and non-judicial foreclosures are possible in Arkansas.
The main document that secures a title in Arkansas is a deed of trust, also referred to as a trust deed, mortgagee’s deed, or simply as a mortgage. An Arkansas mortgagor makes a commitment to a lender to pay their loan through a document called a promissory note. If the mortgagor defaults, the property is foreclosed, but before foreclosure action can be taken, the property must be appraised.
Types of Foreclosures Allowed in Arkansas
Arkansas statute allows for judicial foreclosures on defaulted property. This type of foreclosure, also known as foreclosure by judicial sale, involves selling the defaulted property under court supervision. In order for a judicial foreclosure to be possible, no power of sale clause may be present in the loan documents.
The court will decree the amount of the mortgagor’s debt and will give him or her a specified time period to satisfy the loan. If the borrower does not pay, then the clerk of court, acting as commissioner, will put the property up for sale. The defaulted property is sold as part of a publicly noticed sale and a complaint is filed in circuit court with a lis pendens, which is a recorded document that allows for a public notice of the property.
The sale will be on a credit between three (3) and six (6) months or in installments of no more than a total of four (4) months. In order to secure payment, a lien will be retained on the foreclosed property for its appraised value and the purchaser must give a bond with surety for the purchase price.
Lenders are allowed to bid at the sale. If the property does not sell for the amount that is owed on the loan, the lender may repossess additional properties from the mortgagor. The borrower will then have one (1) year from the date of the sale to redeem the property by paying the amount for which the property was sold along with interest.
The state of Arkansas also allows for a non-judicial foreclosure, which is also known as foreclosure by power of sale. In order for non-judicial foreclosures in Arkansas to be possible, the loan documents must contain a power of sale clause. The purpose of the clause is to authorize the lender to sell the property in the event of default to be able to recover what is owed on the property.
The difference between non-judicial foreclosures and judicial foreclosures is that non-judicial foreclosures allow for the property to be sold without court supervision. This type of foreclosure process is usually much faster and less expensive than a judicial foreclosure.
There are two ways in which a non-judicial foreclosure in Arkansas can proceed. If the power of sale clause states a specific time, place, and outlines terms of sale, then the lender must follow the procedure that is stated. If there is no specification, then the process must follow proper power of sale requirements.
Power of Sale Requirements:
1. Before foreclosure is initiated, the lender must record a notice of default and an intention to sell in the county where the property is located. The loan must currently be in default and only certain parties may serve as trustees. A minimum of sixty (60) days must pass after the filing before further foreclosure action can take place.
2. The notice of default and intention to sell must be mailed by certified mail within thirty (30) days of the date of recording. The notice must include certain information, including details regarding the property, the proposed sale date and other relevant details. Within five (5) days of the notice being recorded, the trustee must mail a copy of the notice by certified mail to all the parties to the trust deed. Then, the lender must publish the notice of the imminent foreclosure sale in a newspaper that is circulated in the county where the defaulted property is located once a week for four (4) consecutive weeks before the sale is to take place. The last notice must be published within ten (10) days of the sale. In addition, the notice must be posted using a third-party posting service at the courthouse in the county where the property is located and the lender must also publish the notice on the Internet with a third-party service.
3. Arkansas statute requires that foreclosure sales take place between 10 a.m. and 4 p.m. at the courthouse in the county where the property is located. Sales may not occur on Saturday, Sunday or any legal holiday. The trustee will auction the property and the highest bidder at the courthouse steps or at the property will win. A winning bid must be at least 2/3 of the appraised value of the property. If no bid satisfies the criteria, the property may be auctioned again within twelve (12) months. The second sale may go to the highest bidder. The bidder must pay either at the time of the sale or within ten (10) days. The foreclosure sale may be postponed without notice if the postponement is under thirty (30) days.
Hiring Legal Help
Due to the current economic situation that is affecting the country, the number of foreclosures has risen dramatically. Although receiving a notice of default may be frightening, help is available to all mortgagors in Arkansas. If you have defaulted on a payment or have already received a foreclosure notice, turn to a leading foreclosure lawyer in Arkansas immediately.
Foreclosure attorneys do whatever it takes to ensure you don’t lost your property. They will speak to your lender and formulate a plan of action that does not involve repossession. Your foreclosure lawyer may suggest mortgage modification, short sale or even a temporary halt in payment as an alternative to foreclosure. Since the process of foreclosing a property costs lenders money, if an acceptable plan is proposed, your lender will most likely agree to it.
Regardless of whether you are struggling with your mortgage because of job loss, a pay cut or other circumstances, you have rights as a homeowner in Arkansas. Speak to a skilled team of foreclosure lawyers in Arkansas right away to get started on your case and prevent your home from being seized.