Properties in foreclosure are a great way to find deals when investing in real estate. It's important however to have a clear understanding of the foreclosure process before deciding to buy a foreclosure property. For any specific questions about buying a Greater Vancouver foreclosure property please call me direct at 604.340.4400.
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In British Columbia, it is the judicial sale process that involves licensees (real estate agents) most frequently. The petitioner or any of the respondents (i.e. 1st, 2nd or 3rd Mortgagee) can apply for a judicial sale, also known as a court-ordered sale (or more commonly known as a foreclosure), which will be carried out under the supervision of the court.
The judicial sale begins with a Demand Letter to the borrower, giving the borrower a short amount of time to pay out their mortgage. Then a petition is filed in the BC Supreme Court registry, which starts an action: The Order Nisi, which fixes the time for redemption. The redemption period, usually six months, is the time period given to the borrower to redeem the mortgage, as well as the amount required. Where a lender (respondent) applies for such an order, he or she may satisfy the court that the value of the property is high enough to satisfy the costs of the sale and the claim of the petitioner. If the property is sold by judicial sale, the petitioner is entitled to recover the difference between the sale proceeds and the mortgage debt from the borrower.
Once a petitioner or respondent has been granted a conduct of sale, they act in the role of the vendor pursuant to the Court Order, only for purposes of disposition of the asset, and can now list the property for sale with a REALTOR®.
When a party has expressed an interest in making an offer on a Vancouver foreclosure, their REALTOR® or the selling agent will draft an offer, directed at the Vendor (usually one of the Mortgagees.) At this point their REALTOR® should confirm that the purchaser understands that although they will be negotiating with the vendor and a deal may be agreed on, there is still a possibility that, when the offer is presented to the courts, the offer may be subject to a sealed bid process by other purchasers. When making an offer on a Vancouver foreclosure you'll also need to agree to the following Schedule A. This document will be attached to your offer.
Once the offer is made and the terms are agreed to, the Purchaser commences their Subject Period. If the purchaser removes its subjects, the offer will be presented to court.
In the courtroom, the process works as follows:
Again what is important to understand is if you have an accepted offer on a Vancouver foreclosure there is always the possibility that another offer is accepted in court.
The following chart has been reproduced with the permission of the UBC Commerce Real Estate Division.
Steps in a Foreclosure Proceeding in BC Demand Letter
A letter accelerating the loan and giving the borrower a short period of time to pay out the mortgage or else face foreclosure.
Filed in B.C. Supreme Court registry. The lender is the petitioner, while the borrower and all other charge holders whose interests rank in priority behind the lender, are the respondents.
The first order of the court. It establishes, amongst other things, the amount required to redeem the mortgage and the time period given to the borrower to redeem.
Order Approving Sale
|Order Absolute of Foreclosure
There are many reasons why a person might fall behind with their loan payments such as a loss of employment, medical expenses and other life-altering events. As we all know with debt comes a responsibility on us to make sure the debt is paid back to the lender on time. If it's not, our credit rating is affected making it harder for us to buy things in the future.
Unlike credit cards (where it only hurts your credit rating), not paying your home loan on time may result in the lender foreclosing on and taking ownership of your home.
If you are falling behind, contact your lender as soon as possible. Lenders generally would prefer not to foreclose, and will usually work with you to get you back on track. Never ignore the lender's letters or phone calls. The problem won't go away and foreclosure will more than likely be the result. I would also recommend getting legal advice from somebody who is a specialist in the Vancouver foreclosure and debt consolidation field who can properly assess your situation.
Another option may be to sell your home pre foreclosure, pay the lender from the sale proceeds and have a fresh start. If you decide to explore this route, I have litterally hundreds of buyers who may be willing to buy right now. If you require a quick sale and information on what your home might sell for please let us know.
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