The most common foreclosure definition in English is something like the following: it is a legal action the lender may take if someone who borrowed money using a mortgage stops paying that mortgage back. Foreclosures allow the lender to either sell off or take possession of the property (after obtaining permission from a court) in order to recoup the money they originally lent out.
Important to understand is that the property owner will not automatically lose the property if they are late on a payment or miss one entirely. Lenders, in general, would prefer to avoid foreclosure if possible — Canada has a lengthy and expensive foreclosure process. Therefore lenders will generally wait two to three months after the borrower has start paying before they start to foreclose.
The first step the lender will take if the borrower is delinquent on a payment is to mail them a letter demanding payment. If the lender does not get a reply to this letter, they will usually start foreclosure proceedings, and simultaneously file a separate lawsuit.
Different provinces have different foreclosure processes. In Quebec, Nova Scotia, Manitoba, Alberta, Saskatchewan, and British Columbia, traditional (“judicial”) foreclosures as described here are the standard.
However, in Ontario, New Brunswick, Prince Edward Island, and Newfoundland the process is quite different. There it is known as “Power of Sale,” and since it does not require the involvement of a court until the end the process goes much faster.
How Does A Foreclosure Begin?
If there is a Supreme Court Registry in the town where the property is located, the lender must go there to start legal proceedings. When they do this, you as the property holder are mailed a document called a Petition for Foreclosure. This notifies you officially that the lender has asked the court to help get their money back.
What Should I Do If I Am Facing Foreclosure?
The first step is to get legal advice. Protecting your interests in the foreclosure proceedings will require you to file a so-called Response to Petition (or, depending on the exact legal rules in your area, other documents) within either 20 or 21 days of the foreclosure process beginning. This will usually have to be filed at the court address on the original Petition, and you will have to “serve” copies of your response to the lender.
After you have responded to the intitial notice of foreclosure, you will receive notification in the event someone else takes a step in the foreclosure process. If you do not respond to this intial notice, you will receive no more notifications and the process with go on without you — it will be almost impossible to defend yourself.