BC Foreclosures

If you encounter financial difficulties, and you know that making mortgage payments will be pretty much impossible and you will likely end up in foreclosure, you should strongly consider selling your home.    It is the easiest way out of your predicament!    By selling ASAP you save the legal costs of a foreclosure (lawyers’ fees can end up in six figures), appraisal cost, reduce the interest you have to pay, and you don’t damage your credit score.   A foreclosure (court ordered sale) can appear on a credit report for 7 years!     During that time you will find it difficult or impossible to secure another mortgage, obtain a car loan  or even open a new credit card.

BC Foreclosure Listings (court ordered sales) can be a source of amazing deals, but there are higher risks as well.   CAUTION should be your watchword!    However, an experienced Realtor can guide you around the many pitfalls.    Still, many informed buyers find the reward of getting a property they love at a great price can outweigh the risks.

An offer to purchase must be accompanied by a legal document, customarily referred to as Schedule A, written by lawyers for the lender conducting the foreclosure.  Schedule A strips away many of the rights normally enjoyed by the purchaser.    Be warned:  the properties are sold “as-is, where is”;   the buyer takes what they get on the Possession Date.   The foreclosed home/property is not guaranteed to be in the same condition as on the viewed date.  Damage may have occurred between the view date and the possession date.   Fixtures (lights, faucets, cabinets, appliances, etc.) may have been removed.   Required maintenance may not have been performed.   Water leaks or mould may be present.  The foreclosed property may contain unwanted trash.

The lender will not make any disclosures, will not offer any warranties as to the condition of the foreclosed property and will not make any repairs.

If you know that the financial difficulties are short term, you could try to get a second mortgage from a Private lender. Facts you need to know: interest rates will be higher, there are upfront costs (can be few thousands of dollars) and payout penalties are high. You have to make sure you can afford the monthly payments.  And you have to make sure at the end of the term (which is usually only 1 year) that you have to have the money to pay back the loan, otherwise the private lender can initiate foreclosure proceedings too.

If you’ve started receiving letters from your mortgage lender about foreclosure, you may still have some time to save your home from being foreclosed. It usually takes 2-3 month before the lender gets the right to sell your property from the Court. You should talk to your lender as soon as possible, explain your situation and see if there are any options for loan modification to give you some relief in the short term.  Most banks would rather work with you than foreclose.  You should speak to a mortgage specialist and try to consolidate your debt into a new first mortgage or get a short term loan to cover your expenses until you sell your property.

A buyer begins by negotiating a purchase price with the lawyer representing the lender.    The offer may contain subjects to allow you to do your due diligence in regards to foreclosed home: building condition, financing, insurance, and other relevant inspections. Once your subjects have been removed, the deal is conditional on court approval and a court date is set (typically 2-4 weeks in advance).  Offer acceptance is only the first step;  if you get a great deal, you will likely face competition in court! The competing offers presented in court must be subject free offers, with deposit attached. The court will review all offers and choose the best one.

The foreclosed homes process can be quite lengthy and frustrating.   Firstly, the Completion Date will depend on the court date, and you are at the whim of the Court’s schedule.  Secondly, even if you have an Accepted offer, you can still lose the property in court to a competing offer!

Additional risks exist if the foreclosed home is not vacant.   If owner occupied, the former owner may not vacate the property in accordance with the court order or may maliciously damage the foreclosed property before departure.    If rented, the tenant has rights under the BC Residential Tenancy Act, and negotiating their eviction could lead to a delay in taking possession of the foreclosed property.

BC Foreclosures can be a source of great bargains.    They often sell for less than market value due to their condition,  risk, soft market conditions and the lender’s need to recoup their money quickly.

BC Foreclosures are best navigated with a Realtor experienced in them – contact us to guide your journey though a court ordered sale.

Demand Letters: When you stop paying your mortgage you’ll get a letter from the bank that gives you a short period of time to pay out the mortgage. You must take steps to do so, to avoid seeing your home as a foreclosure listing!

Petition: The lender will ask a lawyer to start the foreclosure process. The lawyer will file a document (foreclosure petition) in the BC Supreme Court.   The Court will then send a copy of the petition to all parties to the mortgage contract.

Order nisi: First hearing in court. The judge will establish the amount you have to pay to cover the mortgage in full, plus interest & taxes, and it will give you time to ‘redeem’ by paying the full amount you owe. The redemption period is traditionally 6 month.

Judicial Sale: The lender may choose to have the property listed for sale  or seek an ‘Order Absolute of Foreclosure’.  The court has to approve the sale of a listed property (the price, the terms, the dates, the commissions paid).  If the sale proceeds do not cover the lender in full, the lender can seek the deficiency from the borrower under a court action.

Order Absolute of Foreclosure:   If there are no offers, the lender can seek an “Order Absolute of Foreclosure”.   The Order grants the lender ownership of the property and removes the original homeowner from Title.  No further court action can be taken against the borrower after order absolute has been granted.

Contact us as early as possible if you find yourself in financial distress.   We can bring you a quick sale  to avoid winding up in foreclosure!

Learn about the HUGE changes in Real Estate market that are coming in January 2023. Canada Ban on Foreign Buyers, BC Home Buyer Rescission Period, BC End of Rentals and Age Restrictions in Strata Properties.

Before you consider buying a home learn more by checking the facts & tips on our Real Estate Blog page and see how the process works on our Buying a Home page.

Our BC Properties for Sale pages are a great way to get to know different communities. Begin with the photo presentations highlighting each community. Then review detailed information and real estate Market statistics specific to that community.

Each community page also allows you to quickly access the BC Listings in that area, broken out by property type (houses for sale, duplex for sale, townhouses for sale, condos for sale and land for sale).