So, the lender accepted the offer – now what?
In part one, I outlined how offering on a foreclosure is different than offering on a regular listing. Now, the lender has accepted your offer and will apply to court to have the sale approved. Again, the court’s role in all this is to ensure that the borrower who is being foreclosed upon has his or her rights protected, and that the lender isn’t simply trying to fire-sale the property to get it off their books. The court will want to see that the offer on the table is the best possible outcome for all involved, especially the borrower.
Depending on location, you’ll have to wait anywhere from 2-4 weeks for a court date (here in the Victoria area, it tends to be about 10 – 14 days). Foreclosure sale applications are heard in Chambers at the Supreme Court of British Columbia. What this means is that there is no jury, and there are no witnesses to give evidence. Instead, evidence is presented in affidavits, sworn and registered with the court before the court date, and is heard by a Master, most usually.
Should I go to court?
In a word: probably. First, it’s quite interesting to see how these proceedings are played out. Second, if there are other interested parties (a second mortgagee, for example, or a competing buyer), they can make an unconditional offer at court. Third, the borrower could contest the sale.
Court usually starts at 9:45am and how long you’re there depends on how many cases need to be heard, in what order your case is heard, and the level of complexity of the case.
Cases can be complex!
Some foreclosure proceedings are done in under a minute. If the sale is uncontested – the borrower has accepted the loss of the house – there is very little to discuss. The lender’s lawyer will present the offer, give some details about the marketing of the property that was done, the number of showings, general market conditions, and usually, an appraisal to support the offer price. As long as the date for possession is reasonable (if the house is vacant, almost any date will work), the master will usually approve the sale.
However, if the sale is contested it can get very interesting, and you need to be prepared to hang in there. The borrower may contest that the property is being sold for too little a price and may produce evidence like an appraisal that varies widely from the offer price. More often than not, through evidence of marketing activity from the listing REALTOR®, the sale will be approved at the offer price, as long as that can be reasonably justified.
What if there are more offers at court?
A more common complication would be a situation where a second buyer (or more) would show up in court. They will have knowledge of your offer price; this is because once the court date is set, the offer price becomes public record. If this is the case, the master will have each party submit a final offer in a sealed envelope. The master will open the envelopes, and in almost all cases will select the offer with the highest dollar value as the successful bid. This is another reason to attend court or make sure your REALTOR® does so on your behalf with instructions on what to do if there are other offers.
Offer approved – now what?
So the court has approved your offer and you are now committed to buy. Unless something strange happens, it’s now like a regular deal. You get a lawyer or notary to handle the transaction, and the property is registered in your name on the completion date. Any financial charges (judgments, mortgages, liens, etc.) are cleared off the title. If you’re buying a strata property (condo, townhouse, etc.) any balance owed to the strata corporation is also paid out from the sale proceeds before you receive title. Same goes for any unpaid property taxes.
In the next part, I’ll discuss what happens on completion day and what to expect when you take possession. In the meantime, if you have any questions about foreclosure, or need an experienced REALTOR® to represent you, please contact me!