Court Of Kings Bench Foreclosure Process
The court is the legal seller. The court is acting as a middleman to protect the difference between what the home is worth and what the owner owes. The court is stopping the bank from taking direct control and disposing of the property at fire sale prices. The court favours the owners.
The Property
- The legal title to the property is in the owner’s name.
- The property is worth more than the debt of the owner.
- The property is sold “As Is” with no seller warranties or representations.
- The owner has the right to stop the foreclosure by paying all overdue payments plus other fees.
The Offer To Purchase Process
- All offers must be Unconditional. No “Subject To” clauses. No Goods Included.
- There are no condo docs or real property reports supplied by the courts.
- Offers use the Standard Real Estate Offer with all buyer rights and protection deleted.
- All offers are reviewed by the bank’s lawyers.
- The lawyers decide if the court should consider an offer.
- The lawyers arrange a court date for any offers they think could be accepted.
- The lawyers show up at court on the appointed date and wait for the case to be called
- The judge can accept an offer or reject all offers.
- When an offer is accepted the court will set the date for the balance to be paid and ownership is given to the successful buyer. Usually within 30 days.
Notes:
The judge will reject all offers if more than one of the top offers is within a few thousand dollars of the others. The judge feels good about squeezing more money out of buyers that will go to the owners. When the judge rejects all offers, they will ask for “sealed offers only” and set another court date usually the following week.
Buyers’ Due Diligence can still be done in most cases but cannot be written into contracts.
The Players
- The Owner is losing the property, but still on legal title with equity in the house.
- The Bank wants the property or the money. They prefer money.
- The Bank’s Lawyer works for the bank. They toss low ball offers in the garbage.
- The Bank’s Realtor supplies no information to potential buyers because that could cause the bank liabilities. Properties are sold “As Is”
- The Judge is the decision-maker. Ego causes judges to refuse all offers and says try again with sealed bids next week.
- The Buyers range from no experience to buyers with lots of experience and money!
- A Buyer’s Realtor has access to information essential to the buyer’s Due Diligence that is unavailable elsewhere.