The Foreclosure Process in British Columbia
In British Columbia, it is the judicial sale process that involves licensees 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.
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 realtor is being appointed to represent the lending institution to list the property, we will do the normal property evaluation like we do for all Sellers. As most buyer's think it is a good deal to buy "Foreclosed Property", well, the truth of the matter is the lenders and the court are typical Sellers. They want just as much as any normal Sellers. The courts job is to protect the borrower/homeowner. They don't list the property below market price. In my past experiences selling property for different lending institutions, like all Sellers, they start off high. Then as a listing agent, every month we have to do a written report on how many showings and update the evaluation again. Lenders will bring the price down accordingly. They repeat the process every month until it is sold. Even if the mortgage amount might not be big, the amount that involved in the process of being foreclosed on is very significant to the homeowner. The legal fee is approximately $40,000 plus extra interest they need to pay from the time they default the mortgage payment. The rate might not be the same as the original mortgage rate. Therefore, the lenders will only sell it at market price and not just to pay off the mortgage amount. If there is anything left after paying off the mortgage, legal costs and real estate commission, the courts will give this amount back to the borrower/homeowner.
Next week, I'll share the process of buying a foreclosure listing. There are only a handful of agents in the industry has the experience of handling the foreclosure listings. To know more about this topic, you can call me at 604-412-5860 or click to "The Buyer's Guide" for more info.