What is the real-estate process called when a lender sells a defaulted property at a court-supervised auction?

The real-estate process in which a lender sells a defaulted property through a court-supervised auction is called judicial foreclosure.

In a judicial foreclosure, the lender files a lawsuit after the borrower defaults. The court determines whether the lender has the right to foreclose and, if the claim succeeds, authorizes a sale of the property. The property is commonly sold at a public auction, with the proceeds applied according to applicable law.

This process differs from nonjudicial foreclosure, in which a deed of trust or another contract may allow a sale without a full court case. The available procedure depends on the jurisdiction and on the documents securing the loan.

Foreclosure is also distinct from a short sale, where the owner sells for less than the mortgage balance with lender approval, and a deed in lieu of foreclosure, where the owner transfers the property to the lender. These alternatives do not involve the same court-supervised auction.