Foreclosures - Bank Sale - Court-Ordered Sale
Frequently Asked Questions
Is buying a Foreclosure property an option for me?
Properties under Foreclosure are an option for home buyers to consider before making the final decision. Most often the final purchase price for a careful buyer can be significantly less than the market value of a similar property. By careful we mean that it is important for the bidding purchaser to have a clear understanding of the foreclosure process before deciding to buy a foreclosed property.
What is a mortgage on a property?
Simply put, most real estate investors and purchasers require some financing from their bank or the lending institution. For that financial help the lender generally takes back from the buyer security of a mortgage on that property on certain terms and conditions. The property owner then starts to make payments on that borrowed amount till the entire loan amount, fees and interest charges as agreed are paid back to the lender. It is then the owner gets a "free and clear" title to that property.
What does Foreclosure or Bank Sale or Court-Ordered Sale mean?
Due to some unfortunate or unexpected changes in life occasionally some home owners are unable to fulfill their obligations to pay back the loan amount to the lender despite their best effort and cooperation of the lenders. As a last alternative to collect the money owed the lender initiates through Court the process normally referred to as "Foreclosure" or "Bank Sale" .
Why and when does the bank provide a "Notice of Foreclosure" ?
Generally, when any property owner fails repeatedly to make the scheduled payment or breaches any of the terms and condition of their mortgage agreement, the bank or the lending institution then provides the Owner of a property and the Grantor of a mortgage a notice that foreclosure proceedings will be commenced in order to recover funds loaned to the Owner to purchase the property or for other agreed purposes.
Typically the borrower must have missed the scheduled payment for at least 3 months before any mortgage institution or the bank initiates this final Notice demanding clearly the amount owed within a short period of about 30 to 90 days.
How can the property owner avoid the foreclosure process?
This gesture by the lender often allows the owner one additional opportunity to bring current all overdue payments to date, arrange a new mortgage with another lender to payout in full the entire amount per agreement with the previous lender or market and sell the property to pay off the demanded amount to the bank or lender holding the security of a mortgage.
When does the bank or lender take over the "Conduct of Sale"?
If the property owner/borrower is still unable to comply with that Demand Notice the financial institution or the lender will apply to the Court for the “Conduct of Sale” of that property seeking approval to sell and once that order is granted bank quickly offer for Sale that property through an agent of their choice who uses the MLS® (Multi-Listing Service) system in that area or other methods approved by the court for selling that property. This process is commonly referred to as "Bank Sale" or "Foreclosure".
What are some basic challenges when buying a Foreclosure property?
Generally, the bank or the lender having conduct of the sale is interested in recovering simply the loaned amount plus any related penalties or costs approved by the Court. Often the property being sold is worth more than the money owed to the bank. Also, in most cases the owner continues to maintain possession till the property is sold. Home, Condo, Farms or Land Owners facing the bank sale process may be less cooperative with the seller's or the buyer's agents. They also may be negligent by not maintaining or repairing the property to the required standards and they may also be less cooperative to allow proper and timely showings of that Home, Condo, Farms or Land listed by the bank for sale. Buyers, brokers and agents wanting to view and inspect any Bank Sale or Foreclosure Home, Condo, Farms or Land often need to exercise more caution and patience.
What condition is generally the Foreclosure property when sold?
The broker that lists For Sale the property on behalf of the bank/lender controlling now the conduct of sale as ordered by the court must still respect certain legal rights of the Owner (or tenants) by providing a reasonable and sufficient notice to show the home or refraining from Sunday late or early showings and so forth. All Bank Sale, Court-Ordered or Foreclosure properties are usually sold on “as-is, where-is” basis on the date of possession. The bank or the lender generally makes no representations as to the condition of the property. Buyer is advised to conduct proper due diligence and obtain legal and business advice before presenting the offer.
The buyer must also keep in mind that fixtures or chattel ( such as the stove, fridge, curtains, movable shelving units etc. etc.) are often not included in the sale of most bank sale or foreclosure homes and condos. However, Purchaser and the Seller can often negotiate separately the purchase/sale of such items.
Is buying a property in Foreclosure an option for you? 2
At what point does the bank provide a "Notice of Foreclosure" ? 2
How does the Foreclosure Process work? 4
How can I purchasing a Foreclosure or Bank Sale Property? 5
How long does it take to get my offer approved by the Court? 5
How can a home-owner avoid foreclosure? 8
How does the Foreclosure Process work?
The word foreclosure means “to deprive a borrower [in default] of the right to redeem the mortgaged property.” In British Columbia, the foreclosure process it is a Judicial Sale.
It is also an extinguishment. In legal terms, this means to pay off and satisfy in full, or to nullify. Foreclosures in British Columbia are subject to Judicial Sale proceedings. The lender can apply to the British Columbia Supreme Court for a judicial sale, also known as Court-ordered sale, which will then be carried out under strict Court orders.
The foreclosure begins with a demand letter, which offers the property-owner a very short time-frame in which to pay out the mortgage. In simple language, the lender is saying that the property-owner must pay up or put the property at risk of a sale by the lender. The next step is a petition filed in the British Columbia Supreme Court registry, where the foreclosure action begins.
The Order Nisi serves to establish the time of redemption. The redemption period is the time period in which the property-owner can redeem the mortgage, as well as the amount required. The redemption period is usually set at six months even though but can be lesser if deemed necessary by the Courts.
When a lender applies for an Order Nisi, they will apprise the Court of the current value of the property, and ensure that it is high enough to satisfy the cost of the sale and claim off the property-owner. If the property is sold by the Courts, the lender is entitled to recover the difference between the sale proceeds and the mortgage debt from the property-owner.
Once a lender has been granted a conduct of sale, they act in the role of the lender pursuant to the Court order, solely to dispose the assets. They also have the right to list the property with a realtor on MLS if deemed necessary.
When a potential buyer wants to make an offer through the realtor, the offer is prepared and directed at one of the lenders. At that point, the realtor confirms that the potential buyer will be negotiating with the lender, and the deal may be possible once the offer is also presented in the Courts. The offer is often subject to a sealed bid process.
The foreclosure or bank sale process in British Columbia can be a bit complex, time consuming and costly for all the parties involved. We will be pleased to help answer any additional questions or guide you through the entire process. Just let us know by email or simply call us. You may not be required personally to pay any fee for our professional service.
In British Columbia, it is the judicial sale process that involves licensees such as us 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, which will be carried out under the supervision of the court.
When a party has expressed an interest in making an offer, 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.
Once all the terms and conditions to the offer are agreed upon by the parties and all subjects have been removed only then the offer will be presented to court.
How can I purchasing a Foreclosure or Bank Sale Property?
You may contact us by email at foreclosure@BankSaleHomes.com or by phone +1.604.644.2222. One of our associated licensed REALTOR® will be pleased to assist by preparing an offer using a form “Contract of Purchase and Sale”. We will ensure that we make the offer subject to conditions such as Financing, Property Inspection, Title Search etc. and it must also have a subject clause making the contract “Subject to the approval of the British Columbia Supreme Court.” Then we will submit your offer to the Lender or solicitor acting for the Lender, and it is negotiated back and forth in the normal manner. Counter-offers with respect to price or other terms may be proposed until an “acceptable” offer is achieved.
Now you can start your due diligence in order to satisfy yourself with all the subject conditions you included in the accepted offer to purchase the chosen property (i.e. mortgage approval, appraisal, inspection, title verified etc.)
If satisfied, you then remove your subject conditions in writing, except “Subject to approval of the British Columbia Supreme Court” as the only condition remaining. Now you need to provide a deposit by certified funds in the amount generally greater than 5% of the offered price and can be made payable to the Trust Account of the Buyers agent. form part of the purchase price. This amount is paid towards the total purchase price shown in the contract.
How long does it take to get my offer approved by the Court?
The solicitor for the Lender now technically has an “unconditional” offer in hand and shall apply to the Court for a date at which time the offer can be presented for its approval. Generally the process can take about two weeks from the date of the clean and binding offer to purchase as described above.
Once notified of the Court date for hearing your offer you or your lawfully authorized representative will be required to attend along with the Buyer Agent. It is a good idea to review and plan attendance at the given time and place. The matter is presented to and decided by judge or master. Some lists in court also show the price you offered. It is the Court‘s job to protect the “Original Owner” to by making sure the best possible price is received for the property on that day and in that condition. The Court may not automatically approve any offer just because it satisfies the Lender; its role is to protect the foreclosed upon “Owner” to the most extent while keeping in mind that no prejudice is done to the lender. There is a good likelihood that there may be other offers once you approach the court on the hearing day. Be prepared to change at a short notice the price or any other terms, if such be necessary for you to succeed in getting the offer accepted by the judge in court.
How soon after the Court's approval the purchaser can take possession?
The vendor’s lawyer presents the purchasers’ offer to the Judge, (in foreclosure proceedings they are referred to as Masters.)
• The Master asks if there are any other parties in the courtroom who would also like to submit an offer. If there is not, and the appropriate marketing has taken place and the price of the offer is market value, the Master will approve the sale. If there are competing offers in court the Master will instruct all parties, including the original purchaser to leave the courtroom and resubmit their final offer in a sealed envelope to the vendors lawyer.
• After these offers have been submitted, the Master reviews the offers and approves the best deal.
Normally, the existing “Owners” will be given 30 days to vacate the property, but sometimes the Courts will be more lenient and allow up to 60 days.
From this point on, the transaction unfolds in the normal manner.
Is there a Step-by-Step information on the foreclosure process?
We suggest you seek legal advice or discuss this with your personal realtor for the area where the property is located. As general information and convenience we suggest you read the following chart that is prepared by University of British Columbia, Real Estate Division. Note: Information may be outdated and remains subject to change without notice. We will be happy to answer specific questions, just contact us by email: Foreclosures@BankSaleHomes.com or call +1.604.644.2222
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.
The petitioner may choose to have the property listed for sale by the court. Unless special circumstances exist, the petitioner only seeks this order at the expiry of the Redemption Period (Traditionally 6 months).
Order Approving Sale
The court approves the sale of the property. If the sale proceeds do not pay the petitioner in full, the petitioner will seek the deficiency from the respondent borrower under a court action.
Order Absolute of Foreclosure
If the redemption period has expired and if:
1. the property is worth the same amount as the mortgage debt or more;
2. the respondent borrower is judgment-proof (i.e., no assets or money to apply towards a deficiency); or
3. there are no offers under a judicial sale; the petitioner can seek an absolute order of foreclosure, under which the petitioner becomes the new registered owner and all respondents are wiped off title. No further action can be taken against the respondent borrower after the court has granted the order absolute.
How can a home-owner avoid 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 can result in the lender foreclosing and taking ownership of your home.
If you are falling behind, contact your lender as soon as possible. Lenders generally do not want 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 foreclosure and debt consolidation field who can properly assess your situation.
Another option would be to sell your home as soon as possible, pay the lender from the sale proceeds and have a fresh start. Should you decide to go this route, I have literally hundreds of buyers who would 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.