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Buying a foreclosure in British Columbia is somewhat different from buying a regularly owned property and it is important to be familiar with the process prior to entering into a Contract of Purchase & Sale. First of all, please understand that in BC the courts will ensure the homeowner is protected and their property is marketed and sold for an amount as close to "Fair Market Value" as possible.
The Process in Purchasing a Foreclosure or Court Ordered Sale:
After a lender has been given the right to sell the property by the BC Supreme Court, the lawyer acting on behalf of the lender hires a realtor of their choice to market the property. The property is then listed on the MLS system & can be shown by any Real Estate Agent. Many of these properties can still be owner occupied and showing may be limited and sometimes difficult due to the nature of the circumstances.
When a buyer submits a written offer they must include a Schedule A, which is provided by the lender & amends the regular Contract of Purchase and Sale. The contract is then given to the listing agent, the listing agent will present that offer to the lender's lawyer and he or she will act of behalf of the lender during the negotiation. During this period the lender and the purchaser will negotiate a price they are both satisfied with.
Upon accepting the offer, the purchaser will have a subject period (generally 10 business days) to do all their due diligence including inspections & financing. After the buyer has satisfied the conditions, including get their financing in order and any inspections, they then must submit the deposit by way of bank draft or certified cheque. This is now a subject free offer as far as the buyer and the lender are concerned. However, there is one last subject which is "Subject to Court Approval".
The lender's lawyer will now set a court date and this could take on average 2 to 4 weeks time. A few days before court, the listing realtor will disclose the price which the offer was accepted for. 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. Unlike a regular property for sale, the first offer that comes in and is accepted by the lender is not necessarily the person who ultimately ends up owning the property at the end.
At Court the listing agent will collect all, if any, competing offers which must be subject free, contained in a sealed envelope, include a schedule A addendum, and be accompanied with a certified deposit cheque or bank draft.
When the judge has this property address file in front of her, the judge may give the owner one last time to redeem the owner's mortgage and any other outstanding debts. If there is no attempt to pay off all the debts she will proceed with the offers to purchase the property.
Should there be mulitple offers, whoever 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.
Once the judge has approved the sale it is now sold and all documentation is forwarded to the lawyer representing both parties for conveyance.