What does 'foreclosure' refer to in real estate?

Foreclosure refers specifically to a legal process that occurs when a borrower fails to make mortgage payments, leading the lender to take possession of the property. This process allows the lender to recover the remaining balance on a defaulted loan by selling the property. It is a critical concept in real estate, as it impacts both the borrower and the lender, and it signifies a serious financial situation for the property owner. By understanding foreclosure, individuals involved in real estate transactions can be more aware of the implications of defaulting on mortgage payments and the potential consequences for property ownership. The other options relate to different aspects of real estate but do not accurately define the legal process embodied in foreclosure.