California Foreclosure & Home-Selling Glossary: 50 Terms Explained

California foreclosure and real estate law comes with its own vocabulary, and it's hard to make good decisions about your home when the paperwork reads like a different language. This glossary breaks down 50 of the most common terms homeowners run into when they're behind on mortgage payments, navigating a probate sale, dealing with a tax lien, or simply exploring a cash sale — from Notice of Default and trustee's sale mechanics to liens, disclosures, and California-specific laws like Prop 13, Prop 19, and SB 1079 that shape how property changes hands. Jump to any term below, or read straight through.

• AB 1482
• Acceleration Clause
• ARV (After Repair Value)
• As-Is Sale
• Assignment of Contract
• California Homeowner Bill of Rights
• Cash for Keys
• Cloud on Title
• Comps (Comparable Sales)
• Contingency
• Deed in Lieu of Foreclosure
• Deficiency Judgment
• Dual Tracking
• Earnest Money
• Escrow
• Excess Proceeds
• Forbearance
• Hard Money Loan
• HOA Lien
• Homestead Exemption
• IAEA (Independent Administration of Estates Act)
• Judgment Lien
• Letters Testamentary
• Lien
• Lis Pendens
• Loan Modification
• Mechanic's Lien
• Natural Hazard Disclosure (NHD)
• Nonjudicial Foreclosure
• Notice of Default (NOD)
• Notice of Trustee's Sale (NTS)
• Power to Sell
• Pre-Foreclosure
• Probate
• Prop 13
• Prop 19
• Proof of Funds
• Quiet Title
• Reinstatement Period
• REO (Real Estate Owned)
• Right of Redemption
• SB 1079
• Short Sale
• Subordinate Lien (Junior Lien)
• Tax-Defaulted Property
• Title Insurance
• Transfer Disclosure Statement (TDS)
• Trustee
• Trustee's Deed Upon Sale
• Wholesaling

AB 1482

AB 1482, the California Tenant Protection Act of 2019, caps annual rent increases (generally 5% plus local inflation, up to a maximum of 10%) and requires "just cause" for evictions on most rental properties statewide. It matters in foreclosure situations because a lender or new owner acquiring a tenant-occupied property often still has to honor existing leases and AB 1482 protections rather than removing tenants on short notice.

Acceleration Clause

An acceleration clause is a provision in most mortgage notes letting the lender declare the entire remaining loan balance due immediately after a default, rather than just the missed payments. Lenders rarely invoke full acceleration during a California nonjudicial foreclosure — the process is built around curing the arrears — but the clause is what legally allows a lender to demand the full payoff instead of a simple reinstatement once certain deadlines pass.

ARV (After Repair Value)

ARV, or After Repair Value, is the estimated market value of a property once all planned repairs and renovations are complete. Investors and cash buyers build ARV from recent comps of similar renovated homes nearby, then work backward to arrive at a fair purchase price for a distressed or as-is property. If you're comparing offers, our cash offer calculator can help you see how ARV, repair costs, and closing timeline typically factor into the number a buyer offers.

As-Is Sale

An as-is sale means the seller makes no repairs, upgrades, or condition guarantees before closing — the buyer accepts the home exactly as it stands. This is the standard approach for cash home sales and is especially useful for owners facing foreclosure, probate, or deferred maintenance who don't have the time, money, or desire to fix anything first. See how our as-is buying process works for a step-by-step breakdown.

Assignment of Contract

An assignment of contract happens when the person who signed a purchase agreement — often a wholesaler — transfers their contractual right to buy the property to a different buyer, usually for a fee, before closing occurs. It's a legal, common tool in California real estate investing when properly disclosed, though sellers should always confirm who the actual closing buyer will be.

California Homeowner Bill of Rights

The California Homeowner Bill of Rights (HBOR), in effect since 2013, is a set of state laws giving homeowners specific protections during foreclosure, including a single point of contact at the lender, restrictions on dual tracking, and the right to sue over material violations before a foreclosure sale is finalized. It applies mainly to owner-occupied homes with one to four units and was designed to slow down and add fairness to a process that previously offered homeowners very little recourse.

Cash for Keys

Cash for keys is an arrangement where a new property owner — typically a lender after a completed foreclosure auction, or a buyer of an occupied home — pays the current occupant a lump sum (often $500-$3,000) to voluntarily vacate by an agreed date and leave the property in reasonably clean condition. It's usually faster and cheaper for everyone than a formal eviction, and it lets the outgoing occupant leave with some cash and control over their own moving timeline.

Cloud on Title

A cloud on title is any claim, lien, unresolved estate issue, or recording discrepancy that casts doubt on whether a seller actually holds clear, marketable ownership of a property. Common causes include unresolved liens, missing heirs on an inherited property, old easements, or clerical recording errors. A cloud on title generally has to be cleared — often through a quiet title action or a negotiated payoff — before a sale can close with clean title insurance.

Comps (Comparable Sales)

Comps, short for comparable sales, are recently sold properties similar in size, condition, location, and features to the home being valued. Agents, appraisers, and cash buyers all rely on comps to estimate fair market value, and they're the backbone of both a traditional listing price and an investor's ARV calculation.

Contingency

A contingency is a condition written into a purchase agreement that must be satisfied for the sale to move forward — common examples include financing, inspection, and appraisal contingencies. If a contingency isn't met, the buyer can typically cancel the contract and recover their earnest money. Cash offers often waive most or all contingencies, which is part of why they can close faster and with more certainty than financed offers.

Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is a voluntary transfer of a property's title from the homeowner directly to the lender to satisfy the debt and avoid completing the formal foreclosure process. It generally causes less credit damage than a completed foreclosure and can sometimes include lender-paid relocation assistance, but the homeowner typically walks away with none of their remaining equity.

Deficiency Judgment

A deficiency judgment is a court order requiring a former borrower to pay the difference between what they owed on a loan and what the lender recovered by selling the foreclosed property. California law heavily restricts deficiency judgments after nonjudicial foreclosures on purchase-money mortgages for owner-occupied homes — in most typical residential scenarios homeowners are protected from this follow-up debt, though exceptions exist for certain refinances, HELOCs, and investment properties.

Dual Tracking

Dual tracking is when a lender simultaneously pursues foreclosure while also reviewing a homeowner's loan modification application, rather than pausing one process while evaluating the other. The California Homeowner Bill of Rights largely prohibits this — lenders generally cannot record a Notice of Default or Notice of Trustee's Sale while a complete loan modification application is under active review.

Earnest Money

Earnest money is a good-faith deposit a buyer puts down when signing a purchase agreement to show they're serious about completing the purchase. It's typically held in escrow and applied toward the purchase price at closing; if the buyer backs out without a valid contingency, the seller may be entitled to keep it.

Escrow

Escrow is the neutral, third-party process during which a licensed escrow company holds funds, documents, and instructions until every condition of the sale has been satisfied, then disburses money and records the deed. In California, escrow is a standard and required part of virtually every real estate closing, whether it's a traditional listing or a cash sale.

Excess Proceeds

Excess proceeds are funds left over from a trustee's sale auction after the winning bid covers the loan balance, foreclosure costs, and any junior liens. California law entitles the former homeowner to claim these leftover funds, but they must be actively requested from the trustee within a specific filing window — the money isn't sent automatically, and unclaimed excess proceeds can eventually escheat to the state.

Forbearance

Forbearance is a temporary agreement with a lender to pause or reduce mortgage payments for a set period, usually a few months, with the missed amount repaid later through a lump sum, repayment plan, or addition to the loan term. It's meant for short-term hardship rather than a permanent fix, and homeowners weighing it should compare it against other paths — including a straightforward sale — on our behind on your mortgage in Sacramento page.

Hard Money Loan

A hard money loan is short-term financing from a private lender or investment fund, secured by the property itself rather than the borrower's credit profile, typically used by real estate investors who need to close quickly. Interest rates and fees run considerably higher than conventional mortgages, but funding can happen in days instead of weeks, which is why hard money is common in fix-and-flip and distressed-property purchases.

HOA Lien

An HOA lien is placed on a property by a homeowners association when an owner falls behind on dues, assessments, or fines. In California, HOAs have the legal authority to foreclose on their own lien in serious delinquency cases, separate from any mortgage lender foreclosure, though specific notice and mediation requirements must be followed first.

Homestead Exemption

California's homestead exemption protects a portion of a homeowner's equity from certain creditors and, in specific circumstances, from being fully swept up in a forced sale. The protected amount isn't a fixed dollar figure — it's set as a range tied to county median home prices, roughly $300,000-$600,000 depending on county median home price; verify current figures with a CA attorney or the current statute, since these numbers are periodically adjusted.

IAEA (Independent Administration of Estates Act)

The Independent Administration of Estates Act (IAEA) is California legislation that lets a probate executor or administrator handle many estate matters — including selling real property — without needing prior court approval for every single step. Full IAEA authority significantly speeds up selling an inherited house, since the executor can sign a purchase agreement and often close without the multiple court hearings a more restrictive probate would require.

Judgment Lien

A judgment lien is a legal claim against a property that results from a court ruling in favor of a creditor, typically after a lawsuit over unpaid debt. Once recorded against a property in the county where it sits, it generally must be paid off or otherwise resolved before or at closing so the seller can deliver clear title.

Letters Testamentary

Letters testamentary are the official court document issued by a probate court formally authorizing a named executor to act on behalf of a deceased person's estate, including selling real property. Buyers and title companies will typically require a copy of letters testamentary before closing on any home sale involving an estate.

Lien

A lien is a legal claim against a property that secures a debt, giving the lienholder the right to be paid from the proceeds when the property sells (or, in some cases, to force a sale). Mortgages, tax liens, judgment liens, mechanic's liens, and HOA liens are all common types, and any lien generally needs to be resolved for a sale to close with clear title.

Lis Pendens

Lis pendens is a formal notice recorded against a property's title indicating that a lawsuit affecting ownership or a claim on the property is currently pending — for example, a partition action among heirs or a title dispute. It puts prospective buyers and lenders on notice that the property's legal status isn't fully settled, which can complicate or delay a sale until the underlying case resolves.

Loan Modification

A loan modification is a permanent change to a mortgage's terms — such as a lower interest rate, extended term, or missed payments rolled into the balance — agreed to by the lender to make payments more affordable and help the homeowner avoid foreclosure. It requires lender approval and documentation of hardship, and it's typically easier to negotiate earlier in the delinquency timeline than after a Notice of Default has been recorded.

Mechanic's Lien

A mechanic's lien is filed by a contractor, subcontractor, or supplier who performed work or provided materials on a property but wasn't paid. California gives these parties a limited window after completing work to record a lien, and an unpaid mechanic's lien can complicate or block a sale until it's resolved, like any other lien on title.

Natural Hazard Disclosure (NHD)

A Natural Hazard Disclosure (NHD) is a required California disclosure statement informing buyers whether a property sits in a designated flood zone, wildfire hazard severity zone, earthquake fault zone, or other state-mapped hazard area. Sellers must provide an NHD report in nearly every residential transaction, including as-is cash sales, regardless of the property's condition.

Nonjudicial Foreclosure

Nonjudicial foreclosure is the process used in roughly 99% of California mortgage defaults, made possible because most deeds of trust include a "power of sale" clause letting the trustee sell the property without going through court. It's significantly faster than judicial foreclosure — typically several months rather than a year or more — because there's no lawsuit or judge involved at any stage.

Notice of Default (NOD)

A Notice of Default (NOD) is the document a lender's trustee records with the county recorder once a borrower is seriously delinquent, formally beginning the nonjudicial foreclosure process. It states the amount owed to reinstate the loan and starts a mandatory minimum 90-day waiting period before the next step can occur. Homeowners who've received an NOD still have real options — reinstatement, a sale, a loan modification, or bankruptcy — and our California foreclosure timeline breaks down exactly what happens next and by when.

Notice of Trustee's Sale (NTS)

A Notice of Trustee's Sale (NTS) is recorded after the reinstatement window following a Notice of Default expires without the loan being cured. It sets the date, time, and location of the upcoming auction and must be recorded at least 20 days before that sale date. Once an NTS is recorded, the timeline compresses dramatically — but reinstatement is still possible up to 5 business days before the sale in most cases.

Power to Sell

Power to sell is a clause included in nearly all California deeds of trust that authorizes the trustee to sell the property through a nonjudicial foreclosure auction if the borrower defaults, without needing a court order. It's the legal mechanism that makes California's fast, out-of-court foreclosure process possible in the first place.

Pre-Foreclosure

Pre-foreclosure refers to the period after a homeowner has missed payments but before a completed foreclosure sale — commonly used to describe the time between the first missed payment and the trustee's sale auction. This is when homeowners have the most options and leverage, since the property hasn't yet been lost and there's still time to reinstate, modify the loan, or sell.

Probate

Probate is the court-supervised process of settling a deceased person's estate, including validating a will (if one exists), appointing an executor or administrator, paying debts, and distributing remaining assets, often including real property. Selling an inherited house during probate is common in California, especially when heirs don't want to keep the property or need to pay off estate debts; see our guide on selling a probate house in Sacramento for how that process typically works.

Prop 13

Proposition 13, passed in 1978, caps California property tax increases at 2% per year and resets a property's assessed value to its purchase price whenever ownership changes (with some exceptions). It's a major reason two similar houses on the same street can carry very different property tax bills depending on when each was last purchased.

Prop 19

Proposition 19, effective 2021, changed California's rules around inherited property tax reassessment. In most cases, children who inherit a home from a parent must now make it their primary residence within a set time to keep anything close to the parent's original low assessed value; otherwise the property is reassessed at current market value, often significantly raising the annual property tax bill for heirs who don't move in.

Proof of Funds

Proof of funds is documentation — typically a bank statement, verified account balance, or lender letter — showing that a buyer actually has the money available to complete a purchase. Sellers evaluating a cash offer should always ask for proof of funds before taking a property off the market, since not every "cash buyer" is equally capable of closing.

Quiet Title

A quiet title action is a lawsuit filed to resolve competing or unclear ownership claims on a property and establish one clear, legally recognized owner. It's commonly used to clear a cloud on title caused by missing heirs, old liens, boundary disputes, or defective past transfers, and a successful quiet title judgment is generally required before title insurance will issue a clean policy.

Reinstatement Period

The reinstatement period is the window — generally from when a Notice of Default is recorded until 5 business days before the trustee's sale — during which a homeowner can stop foreclosure by paying the full past-due amount (plus fees and costs) shown in the notice, without having to pay off the entire loan balance. It's the primary opportunity to cure a default and keep the home, assuming the homeowner has access to the funds.

REO (Real Estate Owned)

REO, or Real Estate Owned, refers to a property that a lender took back after a foreclosure auction produced no third-party bidder above the opening bid. Banks generally aren't in the business of holding real estate, so REO properties are typically listed for sale fairly quickly, often at a discount, through a bank's asset management or listing agent process.

Right of Redemption

The right of redemption is a former owner's legal right to reclaim a foreclosed property, in some states, by paying the full amount owed even after the auction has happened. California's nonjudicial foreclosure process does not include a post-sale right of redemption — once the trustee's sale is complete, ownership has transferred and there's no legal path to buy the property back through redemption.

SB 1079

SB 1079, effective 2021, changed California's trustee sale auction rules to give owner-occupants, eligible tenants, and certain nonprofits a priority window to bid on a foreclosed property before it goes to investors, and it requires additional post-sale notice and bidding transparency. It was designed to reduce the number of foreclosed homes bought in bulk by large corporate investors and increase the odds an occupant or local buyer can retain or reclaim the property.

Short Sale

A short sale is a sale of a home for less than the total amount owed on the mortgage, with the lender agreeing in advance to accept the reduced payoff and release its lien. Short sales require lender approval and can take 60-120+ days to complete, considerably longer than a typical cash sale, but they generally cause less credit damage than a completed foreclosure.

Subordinate Lien (Junior Lien)

A subordinate lien, also called a junior lien, is any lien recorded against a property after the first mortgage — common examples include a second mortgage, HELOC, judgment lien, or HOA lien. In a foreclosure or sale, subordinate liens are paid only after the senior (first) lien is satisfied, and they can be wiped out entirely in a foreclosure auction if there isn't enough money left over, though the underlying debt may still be owed personally by the borrower.

Tax-Defaulted Property

A tax-defaulted property is one where the owner has fallen behind on county property taxes, typically for five or more years, making it eligible for sale at a county tax auction to recover the unpaid taxes. Homeowners can usually stop this process anytime before the tax sale by paying the delinquent amount or entering a payment plan with the county tax collector; see our page on selling a house with a tax lien in Sacramento for options if you're behind on property taxes.

Title Insurance

Title insurance is a policy that protects a buyer (and separately, a lender) against financial loss from undiscovered title defects — such as forged documents, unknown liens, or missing heirs — that existed before the purchase but surface later. Nearly every California real estate closing includes a title search and title insurance policy as a standard, expected part of the transaction.

Transfer Disclosure Statement (TDS)

The Transfer Disclosure Statement (TDS) is a required California form in which a seller discloses known material facts about a property's condition — things like roof age, past repairs, known defects, and system issues. Certain sellers, including some trustees, court-appointed fiduciaries, and lenders selling REO property, are exempt from providing a TDS, but most standard residential sales, including many cash sales, still require one.

Trustee

A trustee is the neutral third party named in a deed of trust who holds legal authority to conduct a nonjudicial foreclosure on the lender's behalf if the borrower defaults, recording the Notice of Default and Notice of Trustee's Sale and ultimately running the auction. The trustee is not the lender itself, but typically a specialized foreclosure trustee company acting on the lender's instructions.

Trustee's Deed Upon Sale

A trustee's deed upon sale is the legal document that transfers ownership of a foreclosed property from the trustee to the winning bidder at a trustee's sale auction. It's recorded shortly after the auction and serves as the new owner's proof of title, replacing the former owner's rights entirely.

Wholesaling

Wholesaling is a real estate strategy where an investor puts a property under contract at one price, then assigns or resells that contract to another buyer for a fee before the original purchase ever closes, without ever taking ownership themselves. It's a legal, common practice in California when properly disclosed, and it's part of why some cash offers on distressed properties come through investor networks rather than a single end buyer.