Understanding the foreclosure process in Alberta is an important part of navigating your own home foreclosure.
Before we dive in…
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you know how foreclosure in Alberta works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
There’s a few stages that are important to any foreclosure process.
Foreclosure works differently in different provinces.
The two ways different provinces use to foreclose upon a property are: judicial sale or order for foreclosure .
Connect with us by calling (403) 206-7003 or through our contact page to have us walk you through the specific foreclosure process here locally in Calgary.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can sell the property.
Under Order Of Foreclosure (or Non Judicial Foreclosure):
- The property is not sold but is transferred to the lender in satisfaction of the debt.
- It is a different process than a judicial sale.
- The foreclosure order may lead to a deficiency judgement.
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of a sale.
What Happens After A Foreclosure sale?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some provinces limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other provinces will allow the full loan amount to be assessed against the borrower.
Generally, it’s best to avoid a foreclosure. Instead, call up the bank, or work with a reputable real estate firm like us at Calgary Property Options to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Calgary, we can help you.
We buy houses in Calgary like yours from people who need to sell fast.