Cross town Condos . It must be cost-effective to buy an auction house? Shi Runan, a Toronto-area real estate and property planning lawyer, said in an exclusive interview with Sing Tao reporters that in Canada, both bank auctions and court auctions are possible when homeowners default and fail to repay their loans on time.Please Visit: Cross town Condos to Get Your VVIP Registration Today!
The creditor (lender) or the bank will sell the property on behalf of the homeowner. But the sales procedures and consequences of the two cases are different.
“in both cases, the buyer and his lawyer buy the property from the creditor and must ensure that the title of the house is clear, in addition to the creditor’s loan or existing mortgage (existing mortgage) needs to be liquidated (discharged), but also to ensure that there is no liens, rent distribution, easement (easements), and so on. In auctions and foreclosure auctions, creditors usually hire real estate agents to keep the process fair and assist them with sales. Creditors can also sell properties at auctions. “
The main difference between the bank auction house (Power of Sale) and the court auction house (foreclosure) is that the original owner of the bank auction house has the right to redeem the property at any time. On the other hand, when the house is sold by law, it will be decided by the law that the owner is in foreclosure and there is no room for manoeuvre.
Shi Runan said, “if there is any money left in the sale of the property during the bank auction, after repaying the bank’s loan, interest and administrative expenses (administration fees), the bank has an obligation to give the remaining (surplus) to the original owner.” If the sale is not enough to repay the creditor, then the homeowner is still obliged to pay the difference (shortfall). If the selling price of the bank is too low, causing losses to the homeowner, it is possible to be sued by the homeowner. Therefore, banks need to auction at a fair market price. “
The usual process of bank auctions is that 15 days after the landlord defaults, the creditor can issue a notice of sale right (a notice of power of sale) to the homeowner. This clause usually exists in loan agreements with banks and is protected by the Ontario Mortgage Act (Mortgage Act).
“creditors have the right to exercise this right, but they may not do so because banks or creditors may give more grace period, depending on the credit history of specific banks and homeowners, debt-to-equity ratio (debt to equity ratio), the real estate market situation at the time, and other factors,” Shi said. In the notice of sale, the creditor will inform the homeowner of the amount owed, indicating that if the amount is not paid before a certain date, the creditor will sell the property. Usually the time owned by the homeowner is 35 days, or the time stipulated in the contract shall prevail. “
In the process of court auction (foreclosure), the court ordered that the rules that allow creditors to legally own the property were stricter, and all legal procedures must be strictly followed.
Shi Runan said: “because the ownership of the house is transferred to the creditors, the creditors will get (keep) any surplus or bear their own losses after the sale of the house.” This usually means that if the value of the property is much higher than the amount of the loan, then creditors are likely to want to use this kind of auction so that they can make a large profit when the property is sold. There is no need to distribute the excess profits to homeowners like bank auctions. Of course, homeowners can also try their best to avoid being auctioned by the court through additional mortgage loans (refinance) or secondary mortgages (a second mortgage). “
