CREB®Now reader Norman asks…
Q: How does the system of purchasing a foreclosure work? From the moment of saying “I want to purchase the house” to it ending with the judge saying it’s yours. From single purchasers to multiple “bidders,” how long on average does it take?

Joe Howlett, RE/MAX Real Estate Mountain View
A: Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who stopped making payments by forcing the sale of an asset used as collateral for the loan.

In the foreclosure process:

  1. A demand letter is issued to the borrower
  2. The borrower must pay the arrears and legal costs (in some cases the lender will demand full payment of the mortgage)
  3. Should the borrower fail to pay, a statement of claim is filed in the Court of Queen’s Bench
  4. The lawyer working for the lender will issue a certificate, informing other lenders on the title that a foreclosure action has started
  5. The borrower has a redemption period (time allowed by the court will vary from one lender to another)

Realtors tend to deal with two types of foreclosures: court-ordered sales and orders of foreclosure.

In a court-ordered sale:

  • The property is listed by a Realtor
  • Offers are presented to a judge, who will decide if the offer is fair and if it will be accepted
  • Sole proceeds are used to pay all debts on the property title
  • Remaining funds, if any, are paid to the borrower

In an order of foreclosure:

  • The property is not sold
  • The title is transferred to the lender
  • This should not be confused with a judicial sale, which is a different process altogether

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