Arkansas Foreclosure Laws

Arkansas allows both out-of-court and in-court foreclosures. However, before the actual foreclosure takes place, the lender needs to have an appraisal taken of the property. Whether a foreclosure is non-judicial or judicial depends on the terms of the mortgage. If a mortgage has a clause allowing the lender to foreclose without going to court, the lender will generally choose an out-of-court or non-judicial foreclosure process.

Out-of-Court Foreclosures in Arkansas

Most non-judicial or out-of-court foreclosures in Arkansas take less than three months. In most cases, a non-judicial foreclosure takes place in the state because a mortgage has a power-of-sale clause, which permits the lender to sell the property without the court system in the event of default.

This type of foreclosure begins when the lender files a notice of default. Until the property is actually sold, the property is considered in pre-foreclosure and the homeowner can still stop the foreclosure process by paying the debt amount along with any additional fees.

In Arkansas, the notice of default contains the property description as well as the time and the place of the foreclosure sale, so the notice is considered as the notice of sale as well. Within thirty days of the notice being filed, the borrower must be sent the notice and the notice must also be posed at the county recorder's office. For four successive weeks before the foreclosure sale, the notice must be published in a local newspaper. The last notice needs to be published in the newspaper at least 10 days before the sale.

Non-judicial foreclosure sales in the state are usually conducted by an auctioneer, and they are open to everyone but the trustee of the property. The trustee can bid on half the lender. The highest bidder must pay the bid price within ten days after the foreclosure sale. At that point, the bidder is awarded ownership; there is no period of redemption for non-judicial foreclosure sales.

At the first foreclosure sale, the property must sell for at least two-thirds of its appraised value. If this does not occur, the property must be put up for sale again within a year. During this second sale, the highest bidder wins the property, even if the bid price is below the required two-thirds of the appraisal amount.

In-Court Foreclosures in Arkansas

During a judicial or in-court foreclosure in Arkansas, a court decides the amount that is in default. The court also gives the homeowner a specific amount of time to resolve the matter and stop the foreclosure by paying the lender the outstanding debt. If the homeowner does not reply to the court or fails to pay the amount, the property can be put up for sale to pay for the default. The sale generally takes place a month after the court's decision. The homeowner has a redemption period of one year after the foreclosure sale.