Foreclosures occur when a homeowner misses consecutive payments to his or her lender, usually over a time span of at least three pay periods. When they have no means to start catching up on payments, foreclosure is usually imminent. The lender will begin the process of reclaiming ownership, which basically means the title on the property is reversed and it is reclaimed by the original lender. Once the foreclosure becomes official, the lender then has the ability to sell the property and use the proceeds to pay off the cost of the mortgage, as well as any legal fees accrued As unfortunate as foreclosure situations sometimes are, they also offer buyers a chance to purchase a quality property quickly and often slightly below market value.
Why does this occur? Simply put, banks are not in the business of property management. Their main goal throughout the foreclosure process is to recover the original principle loaned out as quickly as possible. While lenders do have an obligation to try and get fair market value, they also want to liquidate the asset as fast as possible. As a result, any reasonable offer made that is close to the asking price is almost always accepted or, at the very least, seriously entertained.
Their are two different types of foreclosures in Alberta - Court of Queens Bench (Judicial) foreclosures and bank foreclosures. The first kind, a judicial foreclosure, involves the sale of a mortgaged property under the supervision of the Court of Queens Bench. All proceeds from the sale go to pay off the mortgage first and foremost, while the remainder of the capital is claimed by lien holders and the original borrower/homeowner (if any is left). All judicial foreclosures in Calgary are unconditional, and only cash offers are considered. In other words, there are no financing options and a home inspection is not performed - the property is sold as is. Since judicial foreclosures involve a lawsuit against the borrower by the original lender, people may still be living in the property until the process is finalized.
On the other hand, bank foreclosures usually involve the sale of an empty property after the mortgage lender has invoked the Power of Sale clause included in a standard mortgage contract. They are almost always much simpler, and as such, move along at a much faster pace. No court supervision is required and in most cases, potential buyers can request financing and a home inspection condition in their offer.
Chattel, or unattached goods, are not included in a final sale. However, goods left in a bank-owned home are often not removed after purchase, so as soon as possession takes place, the items become property of the new owner. This is usually much less common in cases of judicial foreclosure, although it does sometimes still occur. In either case, no official/real property report is provided and buyers will have to pay for title insurance. Offers are often left open for acceptance longer as well, as lawyers and/or the court need some extra time to review a potential offer before approving it.
While the foreclosure buying process can often have a few ups and downs, Calgary Dream Homes team knows exactly how to help you navigate a competitive Calgary foreclosures market. Terry checks and updates the Calgary MLS foreclosure database on a daily basis before compiling the list. Not only can he outline the specifics of each type of foreclosure that occurs here in Alberta, he will also provide professional advice and absolute legal clarity. For more details on Calgary foreclosure listings or to set up an appointment to view specific property, please contact us by filling out the contact from under the Resourses tab on the main page.
