Part 1 - What is a Court Ordered Sale or Foreclosure?

Part 1 of a 3 part series - What is a Court Ordered Sale or Foreclosure?

We have recently been asked more than usual about Foreclosures or in BC Real Estate terms Court Ordered Sales. As we are in unprecedented times of uncertainty with the pandemic shut down of businesses and cascading effects of possible foreclosures both in Residential and Commercial Real Estate we wanted to provide overviews of what is involved with these types of transactions and processes.

As a note, prior to the COVID-19 mid March 2019 self isolation period, the number of foreclosures in the Greater Vancouver area were on the rise compared to the prior year.

The first part of this 3 part series we would like to provide background information starting with definition and types of Court Ordered Sales to lead up to a better understanding of the processes that follow in the following blog parts.

Definitions:

Court Ordered Sale : the process when the Court has been ordered to conduct the sale of a property

Foreclosure : a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Order Made After Application : an order that approves the sale of a property and is used when there has been a buyer found for the property. There is no ability to complete the sale without a court order. For this reason, acceptance of an offer to purchase should be made expressly conditional on approval by the court.

Order Nisi : first order of the court, establishes amongst other things the amount required to redeem the mortgage and time period given to the borrower to redeem

Order Absolute : extinguishes the debt under a loan agreement. The purpose of an Order Absolute of Foreclosure is to transfer the title to the property to the lender and cancel any subsequent charges on title.

There are different types of Court Ordered Sales, here is a list of the more common:

- Foreclosure - lender attempting to recover balance of the loan

- Builder liens' actions - contractor attempting to recover invoices outstanding for work on the property

- Estate Actions - wills Variation, Incapacity, Committeeship

- Matrimonial Actions - Divorce, division of property

- Partition and Sale Act - All joint tenants, tenants in common, coparceners, mortgagees or other creditors who have liens on, and all parties interested in any land may be compelled to partition or sell the land, or a part of it

In the next part, we'll delve into the processes involved in a Court Ordered Sale focussing on helping sellers, buyers and stakeholders conduct a sale and resolve outstanding debt and / or division of property:

Part 2 - What is the Process for a Court Ordered Sale or Foreclosure?