How do Foreclosures Work in Alberta
WHAT IS A FORECLOSURE
Judicial Sales – In Foreclosure
These real estate sales are governed by the “Court Of Queen’s Bench Alberta”. No conditions of any kind may form part of the purchase contract. Possession dates are determined by the courts. In many cases a court date is set once an acceptable offer has been presented. Up until the judge has accepted an offer anything can happen! In some cases the person in foreclosure may still live in the property, making things difficult for viewing. Judicial or Court sales Foreclosures are “as is where is”. Due to the crazy variables in this type of sale, it is best to use us as your real estate agents as we have experience in this type of sale, for better your odds of success.
Court date is determined by the courts and may be a couple weeks from submitting offer. All offers made should be no conditions whatsoever, unlike the traditional real estate transaction. It is best to have access to funds prior to any putting any in offer.
Property is sold "as is, where is", meaning whatever you get at the end of transaction is what you have to deal with.
In the event that there are multiple offers for the home, the judge will make the ruling on what offer wins. There will likely be no counter offer. We have seen in some cases where the Judge will ask the participating individual in court to revise and put in their final offers before he make the ruling.
With foreclosures, there are no land survey [RPR] or condo documents that will be provided.
The court will determine the possession day. Usually 30-40 days after offer is accepted. In some cases, appliances may be left at property but are not part of the contract.
Bank Owned Properties
Property owned by the banks are often listed and sold using the MLS. Here are some of the things you can expect when buying a bank owned property.
Usually offers may have conditions. You may bring in a licensed home inspector, and have a condition of financing. Most institutions will respond within 2-5 business days. Land surveys, real property reports, condo documents are not provided. Appliances do not form part of the purchase contract. Possession is negotiable, but these homes are often vacant so a long possession is not ideal. Purchases are "As Is, Where Is"
Civil Enforcement Sales
In some cases a bailiff or civil enforcement agency has been hired to collect debts, resulting in a real estate sale or partial sale.
What's a partial sale?
The enforcement agency collecting debts can only sell the debtors share of the property resulting only half of a home or the debtors share being for sale. The Civil enforcement agencies have their own purchase contract that is different than the most common one used by Alberta REALTORs®. An experienced real estate agent would be able to guide you through this process. These properties are quire rare.
Marijuana Grow Op Homes
Marijuana grow op homes are are not necessarily in foreclosure or bank owned. These properties do have significant issues, and a buyer should be weary of them. When viewing properties it is recommend to look for evidence of a grow op. Is their mold, tampered electrical, remnants of grow op materials are just a few things to look for. If a known grow op has not been re mediated then access to the property will not be granted.
As is Where Is: This means any chattels and or appliances that are on the property may be left behind, but will not be included as part of the deal, but will probably be left for the new buyer. The condition of the house, condo, or other real estate will not be guaranteed. One other issue is the Real Property Report (land survey) is probably not available and any buildings may not be built within property boundaries. No guarantee as to any construction on the property has proper permits. If the property is a condominium no documents will be provided for the buyer to review. A condo buyer must obtain these documents at their own expense.
How Foreclosure in Alberta Work
It's important to fully understand the foreclosure process. Foreclosure in Alberta begins when a homeowner misses a mortgage payment. The first missed payment is usually addressed by the bank with a letter or phone call. If the homeowner responds by making the payment, the incident is closed, although the homeowner may have to pay a late fee.
One the second missed payment, the lender sends the homeowner a demand letter. The demand letter is a demand for payment and a notice that the formal foreclosure process will begin if the homeowner does not pay. If the homeowner still does not respond, the bank will send a notice of foreclosure claim. The bank may require the homeowner to pay for lawyer fees in addition to the money already owed for missed payments. At this point, it's possible for the homeowner to pay the money and escape foreclosure, but as the missed payments and other fees build up, this becomes harder and harder.
Why Buy a Foreclosed Property?
Foreclosed properties can usually be purchased for a fraction of their value. Home buyers seeking a good deal, buying on a budget or looking for the perfect property at a low cost are often attracted to foreclosures.
What are the Risks and Downsides of Buying a Foreclosed Property?
Unfortunately, there can be many risks to buying a foreclosed property. Buyers who are considering purchasing a foreclosure should be aware of these risks before they commit to a purchase.
Foreclosures are frequently very damaged when the foreclosure finally goes through. Sometimes the property suffers damage because the homeowner is unable to keep up with maintenance while in financial distress. Other times, properties are damaged by homeowners who are frustrated and angered by their impending foreclosure. Some property owners are simply negligent Buyers who purchase a foreclosed property may be faced years of work to repair the house and restore it to its potential. Not all homeowners are prepared to take on years of repairs.
Sometimes Damage is Hidden
Hidden damage is a risk with any property. However, foreclosed homes may be more likely to have hidden damage than homes that have been well maintained. Home buyers who purchase a foreclosed property often buy their home with crossed fingers, hoping that they won't later discover a mould or structural problem that could cost them thousands of dollars.
Remodeling Often Requires Cash
Most home buyers on a budget, the kind of people who are attracted to foreclosed homes, are new home buyers with little money in the bank. After making the down payment on a home, many first time home buyers do not have the start up capital to make an extensive remodel.
Unfortunately, most foreclosed homes need an extensive remodel. Often the very home buyers who would be interested in buying foreclosed homes are themselves not able to put down the money required to make the repairs.
How Can You Tell if Buying a Foreclosure is Right For You?
The best people to purchase a foreclosed property are those who have a DIY attitude and a healthy sense of adventure. People who buy foreclosed homes like to do things on their own, have a lot of experience fixing things themselves, have tools to make home improvements, and often have experience making significant repairs.
Home buyers who do not know how to make repairs, who are not able to use tools wisely and who don't own any tools may not be the best candidates for purchasing a foreclosed property. If you're thinking about buying a foreclosed home in Alberta and you're not sure whether this type of property is right for you, talk to a real estate professional. Your real estate agent can help you decide whether or not you're ready to purchase a foreclosed property.
Ask us to take you to see some foreclosed properties. Once you've seen a few, you'll have a better idea what kind of damage is typical for foreclosed properties, and whether or not you're ready to make that kind of purchase.