Foreclosure Process in
Foreclosure Process in
varies from province to
province. There are two main ways a lender can
recover a mortgage debt when a borrower
. A judicial sale is conducted under the
supervision and authority of the court system.
A lender must apply to the court for the
court’s permission to sell a property.
. A power of sale allows a lender to sell a
property without the involvement of the court.
The lender has the right to sell the property
according to the terms set out in the mortgage
document or according to provincial
legislation that authorizes “power of
sale” within that province.
the “Power of Sale” is
used as the lenders primary method of
recovery. The same method is used in
Prince Edward Island
. The Judicial Sale method
has been adopted as the primary debt recovery
. When it comes to
, the primary method of the
recovery process is called “Mortgage
Foreclosure” or “Mortgage Foreclosure and
”. Even though the
wording is different it is really considered
to be a Judicial Sale because the process
directly involves the court.
What’s the Difference?
are three basic differences between the
Judicial Sale and the Power of Sale:
The extent of Court involvement
is the first major difference. In Judicial
Sale Provinces, the court is extensively
involved in the entire process. E.g. Ordering
the property to be sold, they confirm the sale
procedure and hearing any application for a
deficiency judgment. In contrast to this,
there is virtually NO court involvement in the
” Provinces. Can you guess which system is
quicker? (i.e. people lose their homes
The Instigation of Proceedings.
The way in which the Foreclosure process is
started in the Power of Sale Provinces is
simply by way of sending a notice to the
borrower and current owner of the property.
This “notice” starts the process. In
contrast, the Judicial Sale Provinces start
the process by way of a lawsuit against the
borrower and all who may be liable. Can you
guess which process is far more costly?
The method use to seek a
“deficiency judgment”. In Judicial Sale
Provinces, the deficiency judgment action is
started as part of the main action, or suing
of the borrower via the initial law suit. In
Power of Sale Provinces, a lender seeking a
deficiency judgment must start an action
against the borrower “after” the property
has been sold. So even if you lose your house,
if there isn’t enough equity to cover all
the costs, you may still lose your shirt as
well. All the more reason to do whatever you
can to avoid foreclosure like the plague.
Time frames. The Judicial Sale
process usually can take about six months or
so before it is all over. To contrast this, a
Power of Sale foreclosure (particularly in
) can be over in only 45 days from the time
the “notice” has been given.
are a few minor variations to the basic
proceedings outlined above. For example,
has its original mix of the
two practices, and in
, a foreclosure order from
the court can only be requested after the
mortgaged property has been offered for sale
at a public auction, where the appropriate
notice has been given, and the highest bid was
insufficient to clear the mortgage debt.
BC, there are a few more expensive hoops for
lenders to jump through. The Court must
approve the purchase price, terms of sale, and
even the realtor’s commission entitlement.
The upside to this is that BC is regarded as
being the province that protects borrowers the
most. However, if you do experience the entire
proceedings, you will have the least amount of
equity (if any) left.
the four Provinces that primarily use the
Power of Sale process, only
has adopted the practice of
listing the property with a Real Estate
broker. Now, be aware though, that lenders in
may use the Judicial Sale
method OR the Power of Sale, however, almost
99% of all foreclosures are Power of Sale.
Why? Quite simply, because it is less
expensive than the judicial process and it is
much FASTER. i.e. The lender gets their money
quicker. And on the flip side, you lose your
almost exclusively uses the
Power of Sale method of foreclosure because it
is governed by their Conveyance Act, while the
rules of the Supreme Court authorizes judicial
sale. Go figure.
had an issue in clarifying
the law relating to foreclosure. The courts
concluded to accept the “time-honoured
practice” of the Province and continued to
use the “Power of Sale”.
both judicial and Power of sale until 1982.
Now lenders there rely on the “Power of
Sale” as provide in their mortgage
this time we don't have any information
regarding the Territories.
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and current information we cannot guarantee
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