As promised we have a series of articles for you on foreclosures. The first part of the series is written by Stan Galbraith of Galbraith Law. Real estate insiders will instantly recognize Stan's name as he provides regular articles to the real the real estate industry. He is regularly featured in the "Weekly review," a weekly update provided to members of the REALTORS Association of Edmonton, "The AREA update", a regular update to the 11,000+ members of the Alberta Real Estate Association.
Stan's extensive experience and insight into real estate is top notch in this blogger's humble opinion. I have always been impressed with the thoroughness and professionalism he exhibits when represnting his clients.
What is a foreclosure?
It is a lawsuit just like any other. Filed at the same place with the same filing fee and the same form. What makes it different is the relief. Instead of asking for a judgment for money, the primary request is an order of foreclosure.
Black’s Law Dictionary says foreclosure is “to shut out, to bar, to destroy an equity of redemption or a termination of all rights of the mortgagor in the property covered by the mortgage.”
In an order for foreclosure the court directs the Land Titles Office to put the land in the name of the lender subject only to prior encumbrances.
A final order for foreclosure is rarely issued. The courts in Alberta and provincial legislation provide protection to owners so they can either sell the property themselves or have it sold on the open market. If it is sold on the open market, any money in excess of what is owed on the mortgage is paid to the owner.
How Does It Start?
The first thing that happens is a demand letter. This is where the lawyer writes a letter to the homeowner that says “pay up the arrears or else we are going to sue and take the land away from you.” This may be when the owners finally wake up to the fact they have issues that must be dealt with. They will then phone their Realtor. At this stage the owner still has complete control over the property. They can list the property for sale and it is no different than any other listing, except for the urgency to get it sold. Of course once the listing starts, the lawsuit could start any time after that so there is an additional level of due diligence required from both the owner and the Realtor.
The next step is the Statement of Claim. In other words, the lender is now suing the owner. When the lender does this they will always file a document against title called a Lis Pendens. This is Latin for "litigation pending." When you pull a copy of title and see a Lis Pendens you know the lawsuit has been started.
Now the owner and the Realtor must be careful what they do. If the foreclosure lawsuit has progressed far enough the owner may not be able to list the property for sale. Any owner or Realtor can pull a copy of the Lis Pendens and find out the name of the lawyer who is doing the foreclosure. You can then phone the lawyer or the legal assistant and find out the status of the lawsuit. When placing this phone call ask for the legal assistant that is looking after the foreclosures for this particular lawyer. Their hourly rate is much lower than the lawyer and they will often know more about the particulars of what is going on the file than the lawyer. Foreclosure lawyers typically bill on an hourly basis for all the work they do. Avoiding phone calls directly to the lawyer will lower the costs of the entire foreclosure process.
At the early stages of the lawsuit the owner can still sign a listing agreement with the owner and carry on as usual. Both the owner and the realtor must check with the lawyer to make sure the foreclosure has not progressed too far.
Other topics covered in this series will include: The Redemption Period, Court Ordered Sale, Mortage Insurance, Buying Foreclosure Property, and Offer and Price.
About the author: Stan Galbraith is a lawyer with over 25 years of experience. He was admitted to the Alberta Bar in 1983 and has operated his own law office since 1988. Stan has a wealth of experience ranging from litigation and appeal work, to teaching and writing. He has now left the world of litigation behind and works with commercial and residential Realtors and their clients on closing their transactions. He also practices extensively in the areas of small business and wills and estate planning and administration. You can find his website at www.galbraith.ab.ca.
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Hey Stan,
The lawyer works for the lender in this case. Why should someone in the foreclosure process care about the lawyer’s hourly fees? They’ll be borne by the lender. I can’t imagine a lender will be awarded costs in a foreclosure action.
My understanding is that the fees are added to the total amount outstanding and if there isn’t sufficient equity then it becomes part of the deficiencies. I would be if the lawyer fees weren’t awarded as costs.
Great information.
Good article. With the high numbers of foreclosures most people don’t know the process.
With this additional context, we return to Hawaii and the Honorable Judge Gary Won Bae Chang as he addresses the discovery issue of Plaintiff’s opposition to Pro Hac Vice admission of the Gibson Dunn attorneys.