Arkansas Foreclosure Law Summary 
- 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
