Foreclosure in BC – Part 3 – Closing and Possession

The Court Approved Your Offer – Great! Now What?

In Part 1, I went over how to pursue an offer on a foreclosure or court ordered sale. In Part 2, I detailed how things go down in court. In this post, I’ll go through the ups and downs of closing on a foreclosure and taking possession of the property.

Once the offer has been approved by the court, the petitioner (the bank/lender/mortgagee) submits to the court a draft court order which contains all of the instructions needed to close the sale, such as the purchaser’s full name, the closing date, the order in which financial obligations will be paid off, and so on. The master or judge will approve the draft order and this will be registered at the Court Registry. From this point it is really not that difference from a regular transaction. The buyer retains a lawyer or notary to complete the sale. Funds from the buyer’s lender are sent to the buyer’s lawyer on completion day and transferred to the petitioner’s lawyer and clear title is registered in the buyer’s name.

Possession: A Tale of Two Very Different Possible Outcomes

When it comes to taking possession, things can go very smoothly, or not very well at all. In an ideal world, the property would already be vacant when the buyer makes an offer. Completion occurs, buyer gets possession, done. Simple, right?

Unfortunately this is not always the case. There may be tenants or the former owner still living in the property. What happens on possession day depends on if the occupants are willing to cooperate or not. They may move out, but they may not. If the occupants have not vacated the premises on possession day, then the petitioner must make application to court for a writ of possession and have the occupants evicted by a court bailiff. This process takes some time – up to 3 or 4 weeks in some cases! So, unless you know that the property is indeed vacant, don’t count on being able to move right in on possession day – you may end up temporarily homeless if you have nowhere else to go!

This may end up being beneficial to you as a buyer, however. If the occupants up and leave, they may leave everything in the house there for you to deal with – garbage, furniture, clothing, and so on. If a bailiff comes to evict the occupants, they will show up with a moving crew which will move at least some the occupants’ belongings out so you don’t have to dispose of them.

What If The Occupants Trash The Place?

In short, too bad. There is almost nothing you can do to ensure the condition of the premises when you take possession. It is a very real possibility that if the occupants are angry enough they’ll do serious damage to the property. This is one of the risks of buying a foreclosure; however, it happens extremely rarely.

Expect the place to be dirty, messy, and expect there to be junk left about the property. Also, you cannot assume that the appliances and anything else worth money will be left in the house.

Once the bailiff has evicted the occupants, the locks will usually be changed and new keys handed to the buyer.

The Final Word

Foreclosures can present significant opportunity if you can find the right kind of property at the right price – but they are not without their challenges. If you need help pursuing a foreclosure or court ordered sale, contact me and let’s chat. If you are representing a lender who has a foreclosure upcoming in the Sooke or greater Victoria areas, I would be pleased to handle the case.

–Tim Ayres – Sooke Real Estate Professional