Judicial foreclosure Alberta
The rules governing the judicial foreclosure Alberta may appear to be quite complicated to a common man. Yet, if you are a homeowner facing foreclosure, it is imperative to familiarize yourself with the foreclosure process to understand your options.
So let us start from the beginning:
What is foreclosure?
Foreclosure is how the lenders try to recoup the principal balances and arrears on mortgages from the property owner. Some of the common reason’s lenders start foreclosure action are as follows:
- The homeowner fails to pay timely mortgage payments
- The homeowner fails to pay homeowner taxes
- The homeowner fails to suitably insure the property
- The homeowner fails to pay HOA fines or dues
- The homeowner allows excessive damage to occur to the property
Steps in Judicial foreclosure Alberta
1. Initial contact from the lender
The lender (the bank) will usually call the homeowner or send them a letter when they miss their monthly mortgage payments. Although it is rare, lenders are legally entitled to initiate foreclosure when the borrower misses even one payment. So, homeowners are strongly advised not to ignore this communication.
In most cases, banks prefer to work with the homeowners and accommodate their interests. They offer them the option of making a delayed payment to avoid the lengthy foreclosure process. But they do charge an extra fee for the same.
2 Demand Letter
You will receive a demand letter if you did not respond to the initial contact made by the lender and have defaulted on your mortgage two months in a row. The lender will either send the letter directly to you or via a lawyer or a collections company.
In most instances, the letter usually asks the borrower to pay the arrears immediately to avoid foreclosure.
3. Statement of claim
After the lender begins the foreclosure, the homeowners will get a statement of claim. This statement is generally filed with the honorable Court of Queen’s Bench.
This statement intends to let the party know that the lender has taken action to reclaim the house and secure the title.
Potential options for borrowers
After the borrowers receive the statement of claim, they can take one of the following actions:
1. Take no action
Even though it is ill-advised, several borrowers choose to ignore and take no action against the lenders or their lawyers’ foreclosure warnings.
Once the grace period mentioned in the notice is over, lenders can move on to the foreclosure process’s last stages.
2. Repay the arrears in the redemption period
Until the court orders a final decree of foreclosure, the homeowners can maintain their right to redemption. The negotiated period is mostly 3-6 months and depends on the equity in the property. In this duration, the borrower can repay the debt owed and stop the foreclosure.
In a few cases involving high-equity properties, the lenders are also open to some kind of payment arrangements.
3. Statement of Defence
This is one of the most expensive options for borrowers. Thus, submit a Statement of Defence only if the lender’s foreclosure-related documents are highly inaccurate or if the appraised value is too low.
Do bear in mind that all the legal expenses for pursuing this option will fall on the borrower alone.
4. Demand of Notice
The Demand of Notice is a statement that conveys the homeowner’s desire to stay in the loop about the status of the foreclosure.
This notice is extremely useful for homeowners who are trying to sell their house. It also helps them to secure more time period for coughing up the money to save their property.
In this option, the homeowner agrees to hand over the title to the lender. Thus, they relinquish all their rights over the property and are liable to additional financial penalties. Therefore, homeowners must exercise this option only after consulting with their lawyers.
6. Agree to the foreclosure
If homeowners take this option, they can stay in their house for some more time after agreeing to some stipulation made by the lender. However, this is another option homeowner must pursue only after talking to their lawyers.
The final Sale Of Order by the court
If none of the above options are fruitful, the court will issue a Sale Of Order to the lender. The house will then be available for sale in the market. It is usually listed with a court-appointed real estate agent. The borrower must bear the fees of the agent. The judge presiding over the case will decide if the price is fair.
The amount received from the sale is first used to clear the debt. If there is any balance, the homeowner is eligible to receive the amount. If, for any reason, the house is not sold, the court will issue an order for foreclosure. As per this, the property will be rightfully handed over to the lender to meet the debt.
Any homeowner going through judicial foreclosure Alberta is not barred from taking a mortgage loan in the future. But the process may be lengthy and complicated. Additionally, they must wait for 2 years before seeing the loan. Homeowners can use this time to improve their credit scores and annual earnings.
Facing foreclosure can be very intimidating. However, there are options at your disposal. Speak to a lawyer and get the help you need to make the right decision!