Canadian Foreclosure Process

Canadian Foreclosure Process, a professional Canadian Real Estate investor should have a well understanding regarding Foreclosure process in Canada.

It is considered by all parties to be a nightmare i.e. property owner, lender. The foreclosure process in Canada can take place no matter what cycle is the market going through. The number of foreclosures tend to be high when the real estate bust cycle comes.

Canadian Foreclosure Process

Foreclosure is a legal action that a money-lender can take if the person who borrowed money using a mortgage stops paying back that mortgage. The lender is required to get a Court’s permission to foreclose the property.

Canadian Foreclosure Process

 

 

 

 

The property owner will not lose their property right away when he misses a mortgage payment or makes a late payment. Lenders try to avoid foreclosing the property if possible, due to the lengthy process involved. A lender will probably not start to foreclose until two or three months after the borrower has stopped paying. A lender tend to send out letters asking for payment first. Then, at the same time, the lender will sue them and start to foreclose. In Canada, the foreclosure process is different from province to province.

Canadian foreclosure process the lender can pursue 2 main ways to recover mortgage debt in Canada:

1. Judicial Sale

a. Conducted under the authority and supervision of the Court.
b. The lender must apply and get permission from the court prior to selling the property.
c. A lot of Court involvement for each step

A lawsuit is involved in the foreclosure process against the borrower and other parties liable.

Judicial Sale is used in the following provinces Canadian Foreclosure Process

  • Alberta
  • British Columbia
  • Saskatchewan
  • Quebec
  • Manitoba
  • Nova Scotia

2. Power of Sales

a. Without the court’s involvement, lender is allowed to sell property. This particular way was created to keep the recovery process out of the court system, as well as created the ability to make it happen at a much faster rate than a foreclosure.
b. The Process is started by sending a notice to the borrower.
c. Deficiency Judgment: A legal action against the borrower is required by the lender, after the sale of property.

Power of Sale

is mainly used in:

1. Newfoundland
2. Prince Edward Island
3. New Brunswick
4. Ontario

Generally speaking, foreclosure is a losing proposition for all the parties concerned.

There is no data available to show exact figures, and the number of mortgage defaults are different from market to market. There are nearly over 1,100 mortgage lenders in Canada. The 5 major lender report says there is a default rate of 0.26% – 0.65%

Canadian Foreclosure Process

The information mentioned above is merely a guideline and is not meant to provide a professional legal advice. For your particular case, please consult a real estate lawyer for advice.