Which instrument is commonly associated with non-judicial foreclosure due to a power of sale clause?

• A. Deed in lieu of foreclosure
• B. Mortgage
• C. Deed of trust
• D. Contract for deed

Answer: (C)

The key idea here is that non-judicial foreclosure relies on a power of sale clause built into a security instrument that authorizes a third party to sell the property without court action. The deed of trust is the instrument designed for this. In a deed of trust arrangement, the borrower transfers legal title to a trustee who holds it as security for the loan, and if the borrower defaults, the trustee can proceed with a public sale under the power of sale clause. This process typically happens without going through the courts, making the foreclosure faster in many jurisdictions.

In contrast, a mortgage usually leads to judicial foreclosure, where the lender must go through the court system to obtain a sale of the property. A deed in lieu of foreclosure is when the borrower voluntarily transfers ownership to the lender to avoid foreclosure entirely, which doesn’t involve exercising a power of sale. A contract for deed delays transfer of legal title and involves different, often seller-friendly, foreclosure mechanics rather than a standard power of sale process.