Foreclosure Process in Nova Scotia

In Nova Scotia, foreclosure is a legal process which allows the lender, financial institution or the bank to get ownership of the property and to sell it at a public auction (‘foreclosure and sale’), and to use the sale proceeds to pay off the mortgage debt, legal costs, Sheriff fees and other costs.

Nova Scotians who buy a home need to borrow money from the lender, financial institution or the bank. Usually the loan is secured by a first mortgage on the property.

When you default on your mortgage your lender, financial institution or the bank may take legal steps to ‘foreclose’ on your property. Default means you have broken the terms of your mortgage.  The most common reason for a default is not making mortgage payments when they are due or it is mature and due in full.

Mortgages have many conditions and covenants (promises) the borrower (property owner) must follow.  A breach of any of these promises can be a default, which can result in foreclosure.  While failure to pay amounts owing to the lender is the most common default, it is not the only form of default.

Some mortgages even allow the lender to demand repayment of the mortgage in full and subsequently foreclose at any time at their discretion without default.

However, most lenders, financial institution or the bank prefer to avoid foreclosing, and will make reasonable efforts to accommodate your circumstances, including refinancing (whether with the current lender or another lender or financial institution) or setting up a payment plan that better suits your financial situation.

So, talk to your lender, financial institution or the bank right away if you are having trouble making your mortgage payments.  Do not wait until legal proceedings have started against you as your options may be greatly reduced.

The lender, financial institution or the bank can start the foreclosure process if you default on your mortgage. Default means you break any of the terms of your mortgage, including falling behind on mortgage payments.

Most mortgages have an ‘acceleration clause’, which usually says that if you miss a payment the entire amount owing on the mortgage is payable right away.

Demand letter:  Before taking legal action the lender or his or her lawyer will usually send you a demand letter stating pay up or they are going to sue you.

A demand letter by Lender in Nova Scotia: contains the following items

• why you are in default (for example, you’ve missed payments);
• the amount you owe. This usually includes arrears and legal costs;
• a deadline (often 10 days) for making the payment;
• last chance to pay before the lender takes legal action.

By the time a Demand Letter is sent out the lender, financial institution or the bank has usually already retained a lawyer, which will increase the amount of money the lender is looking for to bring the mortgage up to date.

Friendly foreclosure or a deed-in-lieu

A friendly foreclosure in Nova Scotia basically means you hand back the keys to the property without the lender, financial institution or the bank having to go to court to force you.

The advantage for the property owner is that they will be immediately released by the lender, financial institution or the bank from the loan and from incurring additional mortgage payments, surcharges and assorted legal fees.

Also, the friendly foreclosure is considered a mortgage default which is less disastrous to your credit rating than a forced foreclosure in Nova Scotia.

You might also want to consider putting your property up for sale or talk to Canadian professional real estate investor for a quick sale because a sale outside of the Public Auction process generally generates a higher sale price. You can learn more at www.Flipping4Profit.ca

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