What does "foreclosure" refer to in real estate?

Foreclosure refers specifically to the legal process by which a lender repossesses property when the borrower fails to meet the repayment terms of a loan secured by that property, typically a mortgage. During foreclosure, the lender can take legal action to obtain the property, which may lead to the sale of the property to recover the outstanding debt.

This process usually follows a series of missed payments after which the lender files a lawsuit to initiate foreclosure proceedings. If the court rules in favor of the lender, the property is transferred back to the lender, at which point it may be sold to recoup the funds owed. Foreclosure is an essential concept in real estate law because it represents a significant consequence for borrowers who default on their mortgages, affecting their credit and ownership status.

The other options, while related to the real estate field, do not accurately represent the definition or process of foreclosure. Appraising property value, evaluating marketability, and selling property at auction are all different functions or actions within real estate transactions but do not encapsulate the legal action taken by lenders in foreclosure situations.