A lender can foreclose on an Alabama property in one of two ways, depending on the terms of the loan agreement.
If the loan agreement contains a power of sale clause then a lender may pursue a foreclosure sale without court involvement. The lender must follow the foreclosure terms set forth in the loan agreement or, if no such terms are provided, then those terms set by state law.
If a loan agreement does not contain a power of sale clause then the lender does not have the right to foreclose on the property unless the lender sues the borrower in court. This method is called a judicial foreclosure. Judicial foreclosures are rare in Alabama because most loan documents contain a power of sale clause.
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