Homeowners in Canada who cannot make their mortgage payments are presented with one of two financial resolutions, the procedures of which are ultimately regulated by the province where the property is situated. Properties in Ontario, Newfoundland, New Brunswick or Prince Edward Island have lending rules that initiate the main recovery method through the power of sale. In the provinces of Alberta, Quebec, British Columbia, Saskatchewan and Manitoba, the courts supervise a Judicial sale to recover the money owed. In Nova Scotia, the Judicial sale is referred to as Mortgage Foreclosure, however it is basically the same procedure. Currently, Ontario is the only province that offers lenders the option of either a Judicial sale or the power of sale to solve mortgage problems.
The power of sale clause in the mortgage agreement gives all those who sign the contract a personal responsibility on the mortgage and does not require a court’s involvement. Fifteen days following the borrower’s notification of the mortgagee’s intent to invoke the power of sale, communications are sent to anyone with an interest in the home, like statutory lien holders, advisors or claimants of any ensuing hinderance. Timing depends on whether the power of sale contract is contractual – the full amount can be paid within 35 days — or a statutory power of sale which allows the borrower 45 days to sell the property and pay the balance. This might occur with Mississauga condominiums or townhouses in the area however the proceedings are the same.
In both case, the redemption phase must be satisfied before the home can be seized by the lender. This means that, the mortgagor has the opportunity to sell the house entirely and use the proceeds of the sale to repay the outstanding debt to the lender. If the outstanding monies are not settled within 3 months, the lender may begin a 6 month legal process to have the residents evicted and the house sold for current market price.Attempting to get full market price may be difficult in specific areas of real estate in Hamilton, for instance, that have a high number of properties that are under power of sale. The requirements of power of sale require that both parties attempt to get the largest price on the market with a paper trail to prove it or face legal action. If you are unable to recover the full value of the equity in your house, the lender can sue for the balance. Homes that retain their worth, whether you are search for Halton Hills homes for sale or in Toronto, will have a greater chance of shielding a mortgagor of falling short.
Homes confronted by judicial liquidation start with the court system as the lender must contact them first to be allowed to sell the property if payments are not being made. The judge then mediates the proceedings between the mortgage holder and mortgagee, assigns a timetable for a resolution and mediates any disagreements that come up. The emission of an order absolute by the judge relieves the borrower of having to be responsible for the mortgagee’s ability to reclaim the entire amount owed from the liquidation of the home. With an order absolute, any other creditors or second mortgages must be paid from the sale of the property by the primary lender.
The idea of both mortgage methods — the power of sale and Judicial sale — is to give the borrower a fair chance to keep their house by settling the outstanding debt. Payment extensions or a longer timeframe before the property will be turned over to a mortgage holder can be negotiated while the mortgagor secures the necessary funds.
