Ordinary process

Q: What is Ordinary process?

Ordinary Process refers to a legal foreclosure action conducted through the courts in Louisiana. Unlike non-judicial foreclosures that may occur in other states, the ordinary process requires lenders to file a suit and obtain a judgment before they can foreclose on a property. This process is essential for both lenders and borrowers to understand, as it dictates the legal framework surrounding foreclosure actions in the state.

What is Ordinary process?

Ordinary Process refers to a legal foreclosure action conducted through the courts in Louisiana. Unlike non-judicial foreclosures that may occur in other states, the ordinary process requires lenders to file a suit and obtain a judgment before they can foreclose on a property. This process is essential for both lenders and borrowers to understand, as it dictates the legal framework surrounding foreclosure actions in the state.

Understanding the Ordinary Process in Louisiana

The ordinary process is a significant aspect of Louisiana's real estate law, particularly for lenders looking to reclaim properties after borrowers default on their mortgages. This judicial process involves several steps, ensuring that the rights of all parties are considered. The integration of judicial oversight can add complexity but also provides greater protections for borrowers.

Steps Involved in the Ordinary Process

Filing a Petition: The lender must initiate the foreclosure process by filing a petition in the appropriate court. This document outlines the details of the loan, including the amount owed and the reason for the foreclosure.
Service of Process: After filing, the lender must serve the borrower with a copy of the petition, informing them of the legal action being taken against them.
Judicial Hearing: A court date is set where both parties can present their case. The lender must prove that the borrower has defaulted on the loan terms.
Judgment: If the court rules in favor of the lender, a judgment will be issued, allowing the lender to proceed with the foreclosure.
Sale of Property: Following the judgment, the property is typically sold at a public auction to recover the outstanding debt.

Real Estate Relevance

The ordinary process is crucial in the real estate market of Louisiana for several reasons:

Legal Protections for Borrowers: The judicial system provides borrowers with a chance to contest the foreclosure, offering more transparency and potentially more time to resolve their financial issues.
Impact on Property Values: Foreclosures can affect property values in the surrounding area. Understanding the ordinary process helps potential buyers and investors gauge market conditions and property availability.
Investor Considerations: Real estate investors often look at foreclosures as opportunities. Knowing the ordinary process allows them to navigate potential purchases more effectively.

Example of the Ordinary Process in Action

Consider a scenario where a homeowner in New Orleans has fallen behind on mortgage payments due to unexpected medical expenses. The lender decides to initiate an ordinary process foreclosure. They file a petition in the local court, detailing the amount owed and the circumstances of the default.

The homeowner receives the notice and attends the court hearing, where they present evidence of their financial hardship and request more time to catch up on payments. The judge considers the homeowner's situation but ultimately rules in favor of the lender due to the lack of a feasible repayment plan.

The court issues a judgment allowing the lender to proceed with the foreclosure, and soon after, the property is sold at auction. A local investor, aware of the ordinary process, attends the auction, acquires the property at a reduced price, and later renovates it for a profitable resale.

Important Considerations

Timeline: The ordinary process can be lengthy, often taking several months from the initial filing to the foreclosure sale. Borrowers should be aware of this and seek legal counsel early on.
Costs Involved: Legal fees, court costs, and other expenses can accumulate throughout the process, impacting both the lender and the borrower.
Potential for Redemption: Louisiana law allows borrowers a redemption period where they can pay off the debt and reclaim their property even after a judgment is made.

Conclusion

The ordinary process in Louisiana is a vital legal framework governing foreclosures. It ensures that borrowers have a fair chance to contest foreclosures while providing lenders a structured path to recover debts. Whether you are a homeowner facing potential foreclosure, a lender, or a real estate investor, understanding the ordinary process is essential for making informed decisions and navigating the complexities of the Louisiana real estate market.