Foreclosure enforces a mortgage or deed of trust by having the property sold to pay the debt. Forfeiture is the remedy traditionally written into a land contract: the contract is cancelled and the buyer loses their interest in the property. Your document and the property’s state decide which one you have.
The two remedies compared
| Foreclosure | Forfeiture | |
|---|---|---|
| Document it comes from | Mortgage or deed of trust | Land contract or contract for deed |
| Who holds legal title before default | The payer | The seller |
| What happens to the property | It is sold, generally at a public sale | The contract ends and the seller keeps the property |
| What happens to the payer’s equity | Sale proceeds above the debt and costs generally go to junior lienholders, then the payer | Traditionally lost, though state law may limit this |
| Court involvement | Judicial in some states, non-judicial in others | Depends on the state and the contract |
A general comparison only. State law decides what is available on a given contract.
It comes down to who holds the deed
Under a mortgage or deed of trust, the buyer received the deed at closing and owns the property. You hold a lien, a legal claim against the property that secures the debt, and after a default the way to recover your money is to enforce that lien through a sale. That process is foreclosure.
Under a land contract, also called a contract for deed or installment sale contract, you kept legal title and the buyer has the right to receive the deed once the price is paid in full. Since title never left you, the contract will commonly say that on default you can cancel it, keep what has been paid and take the property back, which is forfeiture. Our page on contract for deed vs mortgage goes further into how the two sales are built.
Where forfeiture has been narrowed
On paper, forfeiture looks quicker and cheaper than foreclosure. A number of states have narrowed it all the same, on the reasoning that a buyer who has paid for years and built up real equity should not lose all of it over a few missed payments.
A state may require a set notice and a chance to catch up before a contract can be cancelled. Some treat a land contract like a mortgage once the buyer has paid a certain share of the price or has paid for a certain length of time, which leaves the seller to foreclose. Courts can also step in where forfeiture would be unfair. We leave individual states’ rules off this page because they change, and an attorney in the property’s state can tell you which remedy your contract supports.
Judicial and non-judicial foreclosure
Foreclosure itself comes in two forms. In a judicial foreclosure the note holder files a lawsuit and a court orders the sale. In a non-judicial foreclosure the sale is held under a power of sale clause, commonly by the trustee named in a deed of trust, and no lawsuit is filed. Which form is open to you depends on the state and on the instrument. The page on a mortgage and a deed of trust shows how the instrument shapes the remedy.
How the remedy feeds into the price of your paper
Anyone buying your note or contract is pricing what happens if the payer stops paying: how long recovery might take, what it could cost and how certain the outcome is. Where the remedy is slow or uncertain, the buyer’s risk goes up and the price comes down.
That is one reason a land contract can be priced differently from a mortgage note on a similar property. The buyer looks past the remedy the contract names to the one the state will enforce, a point our page on selling a land contract comes back to.
Finding out which remedy you have
Start with the title printed on your recorded document: mortgage, deed of trust or land contract. Then read its default section for the words “foreclose”, “power of sale” or “forfeit”. Where the wording is unfamiliar, look each term up in the note basics hub before you go further.
Some holders would sooner pass the enforcement question to someone else. Selling does that, and you can have the note or contract priced with the remedy taken into account.
If you mean to enforce, two checks come before any letter to the payer. Confirm that the payer is in default under the document’s own terms, using the page on what counts as default on a note. Then take the document and its default section to an attorney in the property’s state, who can say which remedy that state will give you on it.
Related questions
Is forfeiture faster than foreclosure?
It can be where it is allowed, because it may not involve a public sale. A number of states restrict it, or require foreclosure once the buyer has paid a meaningful share of the price. Ask an attorney in the property's state before relying on it.
Can a land contract be foreclosed like a mortgage?
In some states, yes, and in some situations the seller has no other choice. Whether you may or must foreclose depends on state law and on how much the buyer has paid.
Does the remedy change what my note is worth?
It can. A buyer prices how long and how costly recovery would be if the payer stopped paying. A slower or less certain remedy raises their risk, which lowers the price.