Does Power Of Sale Mean Foreclosure

by Kristina Roberts on February 28, 2012

Power of sale in Canada occurs when a bank sells a home or property because a mortgage holder defaulted on their mortgage. When the economy suffers, more people default on their loans, and there are more power of sale properties on the market. According to reliable sources, the number of these properties available in Canada in the last year has doubled from the previous period.

Buying one of these properties is not the same as buying a property through the regular real estate market. There are several policies and procedures that are part of the law that must be followed. The best way to keep informed of all the pertinent information is to consult with an attorney that deals in real estate law. They will also be able to warn you of common pitfalls.

Due to their financial difficulties, defaulted owners may not have been able to keep up with repairs and other bills associated with the house. It is for this reason that many of these homes are run down and no longer have working utilities. It is likely there will be a lot of work to make the place livable.

Some of these homes can be considered a great find if you are looking for a fixer-upper. It is a common misconception though that these homes are a better deal than those on the regular market when in reality they are not.

In order for a bank to sell a home through this mechanism, the owner must be in default of their loan. The bank must then provide notice of the amount that is owed and the date the money is due. Only after non-payment as of that due date can the bank put the property up for sale. Law states that if a bank sells for less than the amount owed they can sue the owner for the difference. In addition, if the bank sells it for less than the actual value of the property, they can be sued by the defaulted owner.

There are also no guarantees provided on such a property. Appliances and grounds come as is and there are no promises on how they function or of their safety.

A neighborhood that contains several homes of this type will attract vandals and looters. They will then become damaged and look unattractive. Newcomers will be deterred from buying in the area and property values will decrease. It is these homes that make it possible to get a cheap power of sale home.

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