power of sale clause
Power of sale clause is a provision in many secured loans that allow lenders to receive a non-judicial foreclosure on the assets securing loans in default . Typically, a lender must go through a lengthy judicial process for taking over assets securing loans when they go into foreclosure , but power of sale clauses in the loan agreements allow the lender to avoid the foreclosure process. Not all states allow power of sale clauses, and for those that do, the process for using the power of sale clause differs by jurisdiction. Some states allow the lender to avoid going through a court altogether and can proceed with selling the assets once the 120 day federal grace period for foreclosures has passed. Other states still require some judge oversight throughout a non-judicial foreclosure.
[Last reviewed in October of 2023 by the Wex Definitions Team ]
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