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Calgary Foreclosures

Foreclosed Properties in CalgaryA Foreclosure is the legal process by which a mortgagee, or other lien holder, usually a lender, obtains a court ordered termination of a mortgagor's equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt.

While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lien holders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue homeowners' association dues or assessments.

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What is a Foreclosure?

A Foreclosure is the legal process by which a mortgagee, or other lien holder, usually a lender, obtains a court ordered termination of a mortgagor's equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt.

While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lien holders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue homeowners' association dues or assessments.

The Foreclosure Process in Calgary

The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property.

When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien". If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgment.

The mortgage holder can usually initiate foreclosure at a time specified in the mortgage documents, typically some period of time after a default condition occurs. There are several types of foreclosure that exist. In Canada, there are two main types:

Foreclosure By Judicial Sale

  • Foreclosure by judicial sale, also known as judicial foreclosure involves the sale of the mortgaged property under the supervision of a court, with the proceeds going first to satisfy the mortgage; then other lien holders; and, finally, the mortgagor/borrower if any proceeds are left. Under this system, the lender initiates foreclosure by filing a lawsuit against the borrower. As with all other legal actions, all parties must be notified of the foreclosure. A judicial decision is announced after the exchange of pleadings at a hearing in court.

Foreclosure By Power of Sale

  • Foreclosure by power of sale, also known as nonjudicial foreclosure, is authorized by many states if a power of sale clause is included in the mortgage or if a deed of trust with such a clause was used, instead of an actual mortgage. This process involves the sale of the property by the mortgage holder without court supervision (as elaborated upon below). This process is generally much faster and cheaper than foreclosure by judicial sale. As in judicial sale, the mortgage holder and other lien holders are respectively first and second claimants to the proceeds from the sale.

When buying a foreclosure here in Calgary we need to first determine whether the home you are considering is a Power of Sale foreclosure or a Judicial Sale foreclosure. The distinction determines who is selling the foreclosed home for negotiation purposes. If the sale of the home is a Power of Sale foreclosure, the lender retained the right to sell the foreclosed home via contract. However if the foreclosure is a Judicial Sale; the lender of the mortgage loan must seek the permission of the court to sell the house and therefore offers will need to be approved by the court.

Contact Us Today For Info About Calgary Foreclosures

The Calgary foreclosures process is different than a traditional purchase in regards to the warranties, how long the offer process takes or can take and therefore a more in-depth discussion is best, in my opinion. I would be more than happy to speak with you about the foreclosure process as well as any other specialty sales processes that occur here in Calgary (ie: Distress sales, Assumable, Estate sales etc.) over the phone and or in person, so please feel free to contact me at ANYTIME!