This is the third in our seris on foreclosures written by Stan Galbraith of Galbraith Law. The previous parts in the series were Foreclosures Part 1 and The Redemption Period.
Court Ordered Sale
Once the redemption period expires the court will issue an order directing the sale or other disposition of the property. This is the point at which the owner has lost control over the ability to sell the property.
What do you do if the law firm controlling the foreclosure says you cannot list the property for sale? Ask for paperwork to establish the status of the lawsuit.
As a matter of historical interest, many of the protections afforded to owners go back to the days of the Social Credit party. During the tenure of William Aberhart and Ernest Manning there was a perception in Alberta that the ‘big bad eastern banks’ were out to get the small time farmers and business people and they must be stopped. Laws were enacted to provide property owners protection against the immediate loss of their property. Owners were given time to put their affairs in order and banks had to satisfy the court on several issues.
The laws were amended once again in the early 1980s to deal with some of the issues that arose when real estate crashed and there were a multitude of foreclosures. At that time many people found they had negative equity in their home. They would then sell the property for one dollar to a buyer who promised to take over the existing mortgage. That buyer would rent the property, make no payments on the mortgage and pocket all the profit. The response of the Alberta government was to dramatically tighten the foreclosure process where the bank can show there is no equity in the property.
There are several ways a sale can happen. If the court has ordered a sale through a realtor it will be listed on MLS. Once this happens the owner has lost their power to choose their own realtor. They property is now listed by the court process and the owner cannot also list the property. It cannot be listed twice.
Sometimes, there will be a Judicial Sale by posting the notice of sale in the courthouse for a brief period of time. This is typical where there is little or no equity in the property. In this case the court is still in control of the sale process and the owner cannot sign their own listing agreement with a realtor of their choice. It is important to contact the lawyer or legal assistant looking after the foreclosure. The owner and their potential new realtor must determine whether they have the right to sell the property even where there nothing to indicate this.
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.
