When buying a home, the last thing on your mind is defaulting on your mortgage, or being unable to make payments. However, this does happen to a number of Canadians every year. With the influx of new homeowners and record-high real-estate prices over the last few years and a current increase in the overall cost of living, there may be an expected growth of power of sale cases in Canada over the next few years.
With the current state of the economy, it’s important to understand what this reality can mean for you as a homeowner or potential buyer. Experts in the industry, such as Simion Kronenfeld, are among those taking the time to prepare for whatever may come next in Canada’s economic future.
A power of sale home is one in which the borrower has failed to uphold their legal obligations, and the lender, bank, or mortgage issuer is thus allowed to sell the borrower’s home to get their money back and avoid suing the homeowner. The power of sale process varies depending on the province, and is only applicable in Ontario, Prince Edward Island, New Brunswick, and Newfoundland.
In general, if the mortgage is in default, the lender has the right to sell the property following written notification to the owner.
Since the process of the power of sale can be lengthy and involve a substantial amount of paperwork, it is usually recommended that you contact your lender as soon as you know that you will be defaulting on your payments. Due to the complicated nature of the process involved with power of sale, many lenders may be willing to work with you to find a solution. You can also ask for a second opinion from another financial institution or real estate broker.
Finally, anyone considering the purchasing power of selling a home in search of a good deal may want to reconsider – since the lender is trying to recoup their losses, they will not be selling the home below market value. Additionally, power of sale homes is sold in “as is” condition. This means that any repairs would fall on you as the new buyer. The lender will also be unable to provide detailed information about the home’s condition, no matter the location.
While instances of power of sale cases have not been common across Canada, it is expected that they may grow as the cost of living and inflation continue to rise. In conjunction with new mortgage rules and fluctuating rates, these rising costs may spell trouble for more homeowners.
As a veteran of Canada’s real estate industry, Simon Kronenfeld is someone with the knowledge and experience needed to fully understand power of sale intricacies and considerations.
