Buying a Foreclosure or Court Ordered Sale in BC

Buying a foreclosure in British Columbia is somewhat different from buying a regularly owned property. However there are some similarities.

Just to be clear of one important thing, in the United States the bank owns the property and can sell it as cheap as they wish. In Canada the bank or private lender obtain the right to sell the property which is called an Order for Conduct of Sale and a provincial court judge must approve the sale for a price as close to fair market value as possible. There is no such thing as getting a property for 50% off of the market value in British Columbia.

When a foreclosure is listed on the MLS, the listing agent will showcase that property to as many purchasers as possible. Unlike a regular property for sale, the first offer that comes in and is accepted is not necessarily the person who ends up owning the property at the end.

When the realtor receives an offer from another realtor or an unrepresented buyer, the offer is presented to the lender’s lawyer (whom which has hired the realtor to represent them and he will act of behalf of the lender). The lender and the purchaser will negotiate a price they are both satisfied with and the offer will be accepted with subjects.

After the offer is accepted by the lender's lawyer, in most cases, the purchaser will have 5 business days to do all their due diligence and remove all the buyer subjects (financing, inspection, documentation etc) and prepare a bank draft. This offer is now a subject free offer as far as the buyer concerned. However, there is one last subject which is "Subject to Court Approval".

Keep in mind the lenders and the courts will always say the property is As Is, Where Is Condition - meaning for example if there are appliances when you view the property, there is no guarantee they will be there on possession day.

A court date will be set and this could take on average 2 to 4 weeks time. A few days before court, the lawyer will disclose the price which the accepted offer. That will give any other perspective purchasers the ability to decide if they want to come to court and outbid the original offer or not.

At Court the listing agent will collect all the other offers which must be subject free (other than subject to court approval), include a schedule A addendum, and be accompanied with a bank draft and contained in a sealed envelope .

When the judge has this property file in front of her, the judge may give the owner one last time to redeem the owners mortgage and any other outstanding debts. If there is no attempt to pay off the debts she will ask if there are any other sealed bids for this property.

Whomever has the highest subject free bid in the sealed envelope will most likely be awarded the property. Depending if the property is vacant or owner occupied, the completion and possession could be after the court date will be somewhere between 2 to 8 weeks.

It is strongly recommended that the purchasers are in court to either up their bid or be present to initial any changes that the judge may request. There is no second chances for anyone after the judge has made her decision and there is no chance to back out of the contract. 

The property is now sold.

Please Provide Your Buying Criteria

Ian Watt

Sutton Group West Coast Realty