Is a court ordered sale the same as a foreclosure Vancouver? 

There’s several different kinds of court ordered sales. The ones people are most familiar with are foreclosures. There are sales under the Court Order Enforcement Act, under the Family Relations Act, and several other pieces of legislation, but court ordered sale will most often mean a foreclosure.

What is a foreclosure?

A foreclosure is a situation when a person has a mortgage and can no longer make the payments. At a certain point in time, usually after two or three months of arrears, a lawyer for the lender will send that person a demand letter to make payments. If the person can’t pay, generally they will accelerate the mortgage, which means that the lender will demand the entire mortgage amount outstanding by a certain date. If the person is still not able to pay, the lender will apply to the BC Supreme Court for an order for foreclosure & the property will be listed for sale as a court ordered sale. This is the process for the bank to foreclose on a property in Vancouver. 

How long does a foreclosure take in Vancouver?

Three to six months but in some cases six months to a year. The mortgagee (or the property owner with a mortgage) is most often 2-3 months behind in payments prior to receiving a demand letter to pay from the lawyer of the lender. If the payments remain delinquent, the lender demands a full repayment for a period before applying to the BC Supreme Court for an order for foreclosure. 

If the person has equity in the property, it will generally take six months to a year for the process to play out.

If the person does not have equity in the property, which is most of the cases on foreclosures, it will be probably three to six months. 

How to buy Vancouver foreclosures?

When a property in Vancouver is put into foreclosure, the court will grant what’s called an Order for Conduct of Sale and that means the lender is entitled to list the property on the MLS just like any other property is listed and will be put on the market.

People make bids on the property and when the lawyer for the bank gets an offer that they feel is reasonable, they will make an application to the court to accept that offer.

The court will then set a court date to accept that offer and any other interested party can show up at court to submit a competing offer on the court date.

The court will accept the highest offer on that day.  All offers at court have to be unconditional.

Are Vancouver foreclosures good deals?

In both Alberta and British Columbia the court supervises foreclosures & ensures the property is sold at or near market value. The lawyer for the bank gets an appraisal of the property and the property will not be sold for much less than the appraised amount. 

Unlike in other jurisdictions, where a property could be sold for just for the amount of the mortgage or even less in some cases, that does not generally happen in Vancouver. 

What are the risks to buying a Foreclosure Vancouver?

There are many risks when buying Vancouver foreclosures. 

• If you are writing an offer to submit on the court date, as opposed to being the first offer that would have already done due diligence and removed subjects, it has to be subject free and the 3-day rescission period in BC is not applicable. You are 100% buying the property if your offer is accepted.

• Another risk with your offer is the six or seven page Schedule A that is required with any offer. The Schedule A is a series of clauses drafted by the lawyer representing the lender that basically spells out the buyer is taking on any and all risk with the property without any recourse – an extreme case of “as is, where is”. The property could be in any shape whatsoever. There’s no warranty. It could be contaminated. It could be anything. There could be latent defects, whatever the list is. And the list keeps growing every time the lawyers think of a new thing that they can exempt.

• A third risk is the previous resident does not leave. In this case, the lawyer for the bank will have to obtain a “Writ of Possession”. It may take a couple of days & then the sheriff will have to come out and forcibly remove the person from the property. So you may want to plan for a delay if there is a person in the property who seems uncooperative.

• Fourth, if the person being foreclosed on still occupies the property until possession, that person can actively damage the property up until they are gone. The problem you have with the foreclosure is that the bank is essentially selling the property through the courts, and the registered owner, who may be the person living there, or maybe there’s a tenant who doesn’t want to move out, but regardless they are not really party to the transaction. They’re not signing anything, they’re not necessarily cooperating or happy with the situation.  I had a client a couple of years ago who bought a property and by the time she moved in, there were no cabinets, no fixtures, no toilet, no sink, nothing. The person ripped every single thing out of the property the day before it closed.

• Finally, the owner being foreclosed on can come up with the required money to end the foreclosure proceedings at any time up until the property has changed hands at the Land Titles Office. That would mean your purchase can be terminated at any point, costing the potential purchaser a lot of time and money.

How do you mitigate risk when buying Vancouver foreclosures?

The way to mitigate risk is to either buy the property for land value, where you are not interested in the built property or improvement or, and this is quite common, only consider properties that have been secured by the bank.

Secured by the bank means the property is vacant so you know exactly what you are buying.

Is there any advantage to being the original accepted offer for a foreclosure Vancouver?

The advantage is you can do due diligence. The court date is not set until your offer has removed subjects so you can conduct an inspection, make sure financing is in place, and do anything else you need to do to be satisfied with the purchase.

The second advantage would be if no one else turns up at court because then you will not have to compete and modify your offer. If you wait for someone else to get an offer accepted, you know you will be competing. 

One disadvantage is that any other potential buyer is told the accepted offer price so, if you are competing, they know your original offer but you do not know their offer.

Where can I find foreclosure Vancouver listings?

The Vancouver Real Estate Podcast team has a research tool that will email you any time a foreclosure is listed for sale. We can set the search to focus on exactly what you are looking for and one of our foreclosure experts can help you through what can be a risky & complicated process.

We also can help with experience and guidance if you are looking at foreclosures for Renovation Projects or a Fix & Flip.