Notice of default a notice to a borrower with property as security under a mortgage or deed of trust that he/she is overdue in payments. If the amount owed, plus costs of preparing the legal papers for the default, are not paid within a certain time, foreclosure proceedings may be brought against the property. Other people with funds secured by the same property are usually entitled to receive copies of the notice of default. It is a formal written notice to a borrower that a default has occurred and that legal action may be taken.
The following is an example of a notice of default provision:
"After the expiration of 30 days from the recording of the Notice of Delinquent Assessment and, absent receipt of payment of all amounts owed to the association, ABC Co. will prepare a Notice of Default and Election to Sell. The official beginning of the "Trustee’s Sale Proceeding" (non-judicial foreclosure) occurs when the Notice of Default is recorded by ABC Co. at the county recorder’s office.
There are several parties entitled to receive a copy of the Notice of Default. ABC Co. will mail a copy of the notice within ten days after recording to the record owners and all persons who have recorded a "Request for Notice". Further, ABC Co. will send notice to other parties having an interest in the property within thirty days as required by law.
At the time ABC Co. records the Notice of Default, a "Trustee’s Sale Guarantee" (TSG) is purchsed from a title company. The TSG is a type of insurance policy which provides the trustee with certain information that is needed to properly conduct a non-judicial foreclosure and insures the homeowners association and Allied in the event the information is incorrect or incomplete."