Foreclosure – a word that strikes fear in the hearts of homeowners across Canada. It’s the legal process that lenders use to take back property securing a loan, typically after the borrower stops making payments. But, don’t let the big, scary “F” word intimidate you!
Picture this: you’ve worked hard to make your dream of homeownership a reality. You’ve scrimped and saved, put in countless hours of overtime, and finally signed on the dotted line. But then life happens, and despite your best efforts, you find yourself unable to make your mortgage payments. The stress and uncertainty of facing foreclosure can be overwhelming, but understanding the process can help you make informed decisions and hopefully come out the other side with a brighter future.
Understanding the Foreclosure Process in Alberta is an important part of navigating your own home foreclosure if you ever find yourself in a situation where you can no longer afford your mortgage payments. Foreclosure is the legal process that lenders use to take back a property that secures a loan, usually after the borrower stops making payments. In Alberta, foreclosure works differently than in other provinces, with two methods of foreclosure: judicial sale and power of sale. Knowing the details of each can help you determine the best course of action.
Understanding the Foreclosure Process in Alberta
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. While foreclosure can be stressful, it’s important to know that there are steps you can take to navigate it successfully.
When you understand how foreclosure works in Alberta, it gives you the knowledge to make informed decisions and come out the other side as well as possible.
The Basic Stages of Foreclosure
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different provinces around the country.
The two ways different provinces use to foreclose upon a property are: judicial sale or power of sale.
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:
- In a judicial sale, your mortgage lender has to file a lawsuit in the court system. You’ll receive a letter from the court demanding payment, and if you don’t pay during the payment period, the lender can request the sale of your property. The property is then sold through an auction, and the sheriff will serve an eviction notice if you don’t vacate the property.
Under Power of Sale:
- On the other hand, power of sale does not require court involvement. Your mortgage lender will serve you with papers demanding payment, and after the waiting period, a deed of trust is drawn up, and control of your property is transferred to a trustee. The trustee can then sell your property to the lender at a public auction.
It’s important to note that during either type of foreclosure, anyone who has an interest in the property, such as contractors or banks with liens against the foreclosed property, is entitled to collect from the auction’s proceedings. But, there’s hope! You can avoid foreclosure by negotiating with the bank or working with an experienced investor to help you lower the amount owed or eliminate it entirely.
Facing foreclosure in Alberta can be overwhelming and stressful, but don’t worry! By understanding the foreclosure process and seeking help from experienced professionals, you can navigate this difficult time and come out on the other side with a brighter future.
What Happens After a Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds. Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment 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.
If you’re facing foreclosure in Alberta
Facing foreclosure in Alberta can be overwhelming and stressful, but don’t worry! By understanding the foreclosure process and seeking help from experienced professionals, you can navigate this difficult time and come out on the other side with a brighter future.
Let Wade help you explore your options.
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A Final Foreclosure Resource For Alberta Home Owners: