You may be looking at purchasing a house from a lender who is selling the house using the authority granted to them under the power of sale provisions of the Mortgages Act.
Power of Sale
Occasionally, homeowners are unable to maintain the mortgage on a property. When this happens, real estate lawyers are often called upon by lenders to help. Lawyers are being retained by the lender to recover the funds that were borrowed, plus interest and costs. There is nothing nefarious about it. Most lenders give the homeowner ample opportunity through non-legal processes to get back into good standing. However, for a variety of reasons, the homeowner is unable to put the mortgage back into good standing. Lawyers will issue a Notice of Sale to warn the owner that if the default is not cured, the property will be sold. When the warning period expires, the property is listed for sale in order to recover the debt. This type of sale is called a power of sale.
Agreement of Purchase and Sale
There is nothing wrong with buying a property by way of power of sale. There are many high quality properties being sold this way, and many people are very happy with their purchases. The important point to note is that the Agreement of Purchase and Sale will have a schedule attached to it, which will add to and modify many of the standard terms of an agreement. In order to understand these kinds of schedules it is a good idea to retain a lawyer to review and explain it to you. If you do not speak to a lawyer, you may be unaware of the legal meaning of some of the terms in such a power of sale schedule.
Power of Sale – A good deal?
It is a myth that you can get a “good deal” from the lender because it can sell a property for whatever it wants. This is not the case. The lender has an obligation to sell the property at fair value for the property. Otherwise the lender may expose themselves to liability. As much as a lender wants to recover the loaned funds, it is a non-starter if in so doing the lender is sued for selling for too low of a price.
How we can help
If you would like to purchase a property from a lender, and you would like the writer to represent you on the purchase, please contact Noah Potechin by calling 613-563-6692.
