Arkansas Laws

Arkansas foreclosures can be either judicial or non-judicial. Judicial foreclosures are used when there is a problem with the property title or a mortgage lacks a Power of Sale clause entitling the lender to foreclose without the aid of the court in the event of a default. Judicial and non-judicial Arkansas foreclosures are equally as common.

To begin a judicial foreclosure, a lender must file a suit (Lis Pendens) against the defaulted homeowner in court. The court then holds a hearing at which the homeowner may contest the default. If the homeowner fails to contest, or the court finds sufficient evidence of a default, the homeowner will be ordered to pay the default debt by a certain date. If this date passes without payment, the court will order the homeowner's property sold at auction in order to retrieve the amount the lender has lost on the loan.

Non-judicial foreclosures begin when the lender files a Notice of Default with the county records office outlining the default amount owed as well as a date and location for a foreclosure sale. The homeowner can halt either a judicial or non-judicial foreclosure by paying off the default amount owed to the lender at any time up until the day of the sale.

Before either type of sale can occur, the court clerk or the lender must issue a Notice of Sale and publish it in a local weekly newspaper for at least four consecutive weeks. The final Notice must appear ten days prior to the sale at the most. The Notice must also be posted at the county records office. The homeowner must also receive a copy of the Notice at least four weeks before the day of the sale.

It's important to note that the property must be appraised before the sale occurs as well, as the sale's validity will depend on whether the sale price satisfies a major portion of the appraisal value.

On the day of the sale, the property is auctioned off to the highest bidder by either a court clerk or a trustee of the lender. The winning bid must exceed at least 2/3 of the appraisal value of the property, or the sale is void and another sale will be scheduled to occur within 12 months. The outcome of the second sale is final, regardless of the sale price.

Once either a first or second sale determines a winning bidder, that person has ten days in which to provide the amount of the winning bid, after which they are entitled to full ownership rights.

While non-judicial Arkansas foreclosures do not provide rights to redemption, certain mortgages might specify a certain time frame for redemption that must be heeded. Judicial foreclosures allow the original homeowner one year from the date of the sale in which to redeem ownership by paying off the full sale price of their property plus any additional costs or interest.

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