The roller coaster real estate market has brought with it many “non-traditional” deals for Realtors and buyers. Foreclosures have become more common (about 6% of LISTED properties in the OMREB, and much less common than in the United States) many people have asked questions about what happens during the sale of these distressed properties.
The first sign that a property may be in foreclosure (aside from the lawn sign!) is that a Certificate of Pending Litigation may appear on title.
The Steps in a Foreclosure action in British Columbia are as follows:
2. Demand for Payment
3. Filing of Petition
4. Order Nisi (final order, usually with time for Redemption (~ 6 m)
5. After Redemption Period, either:
– Order for Conduct of Sale (special circumstances), OR
– Order Absolute of Foreclosure
A Buyer can make an Offer at any stage of this process and therefore it is important for parties to ensure they are dealing with the party (either the Seller or the Lender) with “Conduct of Sale”.
In the event that a party wishes to submit a competing bid, the original contract of purchase and sale will be attached to the Lender’s affidavit and this is a public document that can be found by searching the Court Registry in BC.
Where a Lender has obtained an “Order for Conduct of Sale” the Lender’s Realtor will be required to attached a Schedule “A” to any proposed Contract of Purchase and Sale which generally states the following terms and conditions:
1. Court Approval of the Offer is required After Subject Removal
2. Court will have full discretion, the lender will not advocate for the buyer
3. Other Offers May be Entertained
4. Title Transfer by Vesting Order of Court
5. Lender makes no Warranties as to: Title, Condition of Premises, Environmental Condition
Buying a foreclosure in B.C. can be an unpredictable ride. For those investors familiar with the process, some “deals” may be had but generally, as the Court often has fair market value property appraisals, foreclosures in B.C. are not a panacea of “good bargains”.
First Time Home Buyers should not view the foreclosure market as a good way to buy their first home. The inherent uncertainty in the process, the “as-is” nature of the home, and the higher acquisition costs mean that most First Time Home Buyers are better off buying non-distressed property on their first foray into home ownership.
The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.