| As you know, these emails are based on issues that come across our desk. A topical issue these days is purchasing property out of foreclosure.
When a borrower defaults on a mortgage, the lender can initiate a foreclosure proceeding in the BC Supreme Court. The first step is obtaining an order nisi, which typically contains a 6 month redemption period. The redemption period is the time that the owner can ‘redeem’ their property by paying off the full outstanding mortgage balance, plus interest and other associated costs. If the mortgage is not redeemed, the lender may apply for conduct of sale. A conduct of sale allows the lender attempt to sell the property. Once an offer has been accepted by the lender and subjects have been removed, the lender will seek court approval. At this point any third party can submit an offer to the court, so the original buyer may find themselves in a bidding war. There are other major risks (other than a bidding war) that consumers need to be aware of. One of the biggest is that the property will be sold “as is-where is” with limited or no vendor promises. The fixtures could even be removed! Other risks include the residency of the vendor: if the seller was a non-resident, the purchaser will be liable for any tax consequences. There may also be occupancy issues if the property was not vacant at the time of sale. There are other risks not highlighted here, There are other risks to consider as well, so just like any other file, be sure to contact a lawyer early in the process. We are experts in this field and we would be happy to assist your clients when the time comes. We will soon be sending out a video on foreclosure sales, so fire away with any questions and we will do our best to answer them in the upcoming video. As always, thanks for the support. |