After foreclosure, how long to eviction?
The answer is, it depends. First of all, it is important for any homeowner facing foreclosure to ensure they are in fact facing foreclosure. In many provinces, lenders do not use the traditional judicial foreclosure route. Instead, they use what is called a Power of Sale to quickly recoup the outstanding balance of the mortgage. If the homeowner is subject to a Power of Sale, the whole process will go much faster and they will have less time to vacate the property.
Assuming the property is going through judicial foreclosure, the homeowner can generally anticipate the process taking between three months to a year, after which they will have to leave the property once an Order for Foreclosure is issued.
How Long To Vacate After Foreclosure?
Generally, once a formal Order for Foreclosure (or Order for Sale) is made, anyone living in the property will generally be served a Court Order which requires them to move inside of 30 days. After this time, a Civil Enforcement Agency or the Sheriff may force the tenant out of the property.
“I’m Facing Foreclosure… How Long Before Eviction?”
This is a common question but it is less clear-cut than what happens after a foreclosure order has been made.
The fact is, foreclosures are long and drawn out processes. While they can in theory result in a formal foreclosure and eviction within two to three months if the homeowner (and now Defendant) does not put up any defense or take part in the proceedings, generally they take longer.
Once the foreclosure action is filed, the property owner is given 20 days to serve and file either a Demand for Notice or Statement of Defense. If they (or, ideally, their attorney) do not do this, the Plaintiff (the lender or bank) will tell the Court the property owner has decided not to fight the claim and foreclosure will proceed quickly.
Regardless of whether the property owner decides to take part in the foreclosure action, the lender or bank will make several more filings with the court, including an application for some remedy — generally, the sale of the property.
Once all this has been done, and particularly if the property owner is mounting a defense in court, the court will usually issue a Redemption Order giving the property owner some time to make the mortgage current. This period is generally six months, but it may be extended (if the property owner persuades the judge this is warranted) or it may be shortened (if the lender or bank persuades the judge to do so).
At the end of this time period, the court may order the property sold. If the property does not sell, or if the Court does not accept an offer, the court may then issue an Order for Foreclosure or make an Order for Sale to the lender.
Once the property has been sold, or an Order for Foreclosure has been made, the new owner is usually entitled to take possession of the house or property inside 30 days. After this point, a forcible eviction may take place.
How long before foreclosure starts?
If you are a homeowner in financial trouble, this is a common question. In fact, a bank can start foreclosure proceedings as soon as you commit an “act of default,” which is defined by your mortgage agreement but usually includes at least the following:
– Failure to make payments on your mortgage
– Allowing major damage to happen to the property
– Failure to properly insure the property
– Failure to pay condominium fees or taxes on the property
Technically, the bank can begin foreclosure as soon as you miss a single payment, but most banks will not do so for a very simple reason: foreclosures are an expensive, lose-lose process in which usually neither you the homeowner nor the bank will avoid losing time and money.
Foreclosure Procedure in Canada
Now, it’s important to note that not every province uses foreclosure when a lender needs to recover money on a mortgage in default. Judicial foreclosures are favored in Alberta, British Columbia, Manitoba, Saskatchewan, Quebec, and Nova Scotia (though the Nova Scotia process is slightly different).
On the other hand, if the property is in Ontario, Prince Edward Island, New Brunswick, or Newfoundland and Labrador, the property will probably subject to a Power of Sale. A Power of Sale is much faster and far less expensive to the lender than a foreclosure.
In theory, a lender may begin foreclosure if you miss just a single payment. On the other hand, this almost never happens — foreclosures cost the lender a great deal of time, and they almost always lose money on the deal. It’s in their interest to find a compromise if they believe one is possible.
Therefore, you should immediately contact the lender to try and work out alternative terms of payment. This is usually possible if you can show them that your missed payments were due to a one-time emergency and you will not have any difficulty making them in the future.
The Basic Rules of Foreclosure
Keeping in mind that we are not foreclosure attorneys and you should not consider this to be legal advice, here is how Canada’s foreclosure process usually works.
Provided that your mortgage is not subject to a Power of Sale, the foreclosure will begin like any other lawsuit. The lender (who will be known as the Plaintiff in court documents) will file a Statement of Claim with the court whose jurisdiction covers the property. The Plaintiff will also serve you with a copy of this Statement of Claim, at which point you become the Defendant.
Once the Statement of Claim has been served on you, the clock starts ticking. There is a 20 day period where you can file your reply, and serve a copy on the lender. (Generally your reply takes the form of a Demand for Notice or Statement of Defense.)
If you do not do anything, you will likely be declared “in default” in terms of the foreclosure action. This is not the same thing as being in default on the mortgage. Should the court agree and declare that you are “in default” in foreclosure terms, this means that you’ve decided not to fight it. You won’t be given any further chance at defending yourself, nor will you be kept informed of court proceedings.
Regardless of which you choose, the lender files several more statements at the court. The court will then likely issue a Redemption Order, which is actually helpful from your perspective. The Redemption Order provides for a certain period of time in which you can bring the mortgage current or even pay it off completely. (Only if the court believes there is no chance for you to pay off the mortgage will they skip the Redemption Order.)
This period is normally 6 months, though the lender might ask for it to be shortened and you can ask for it to be extended. If you can come up with the money — redeem the mortgage — then you effectively prevent your house from being foreclosed.
When Does A Foreclosure Start?
Normally, a bank will not foreclose immediately after you miss a single payment. Foreclosures are too time consuming and expensive. Instead, it’s often in the bank’s best interest — and certainly in yours — to reach a compromise agreement, usually an alternative payment schedule that will get your mortgage back on track.
However, at some point the bank will start considering foreclosure. When this happens depends on the property value, the number of payments you’ve missed, and a host of other factors which affect the bank’s risk of not being repaid the loan. After all, the entire point of this process is to stop the bank losing money, since the bank loses money each time a mortgage payment isn’t made.
If the bank needs to sell the property or take ownership of it from an owner who is delinquent on the mortgage payments, they will do this if need be. At this point, the bank will file for foreclosure.
What happens when you go into foreclosure?
Many homeowners believe it means they will automatically lose their house, but this is not necessarily true. What happens when your house goes into foreclosure depends on many different factors, including your own financial situation and whether you defend yourself against the foreclosure action. If you do nothing, you will of course almost certainly lose the property.
There are basically three outcomes of a foreclosure process:
1. The property owner and lender may be able to solve the problem on their own, generally by the property owner coming up with some money to bring the mortgage current.
2. The property owner can do nothing, which invariably results in loss of the property.
3. The property owner can go to court. Once in court, the property owner again has three choices: they can try and cooperate with the lender, which sometimes results in them keeping the property. They can try and delay the process, in order to get more time to get their affairs in order before the court issues a final foreclosure order (which results in eviction). Or, the property owner can try to fight the foreclosure.
First, it’s important to note that, while lenders can foreclose on your house after you miss even a single payment, they almost never do. Foreclosures are a pricey process — it’s both in the lender’s and in your interest to reach a compromise. Often, property owners can work out an alternative payment schedule to bring things back up to date without a foreclosure. Banks resort to foreclosure in order to stop losing money, which is what happens every time a mortgage payment is missed.
Second, in many provinces foreclosures are not used. Foreclosures require heavy intervention from a court, which takes time and costs money. Instead, in some provinces lenders will use what is called a Power of Sale — in this process, a court is not involved until the very end, and the lender can take possession of and sell the property in a time span measured in weeks. Foreclosures, on the other hand, take between three to twelve months.
If your mortgage requires a judicial foreclosure rather than allowing a Power of Sale, the foreclosure action will begin like any lawsuit: the Plaintiff (the lender) will file a Statement of Claim with the Court, and serve you (the Defendant) with a copy of this Statement.
Once this happens, you will have 20 days to file with the court and serve the lender with either a Demand for Notice or a Statement of Defense. If you do not do one of these, the lender (Plaintiff) will be able to note you “in default” — that is, in default in terms of the court action. (The lender is already claiming you are in default on the mortgage.) Being “in default” here means you have decided not to defend or fight the foreclosure, and you will not be kept abreast of the court proceedings and you will not have any further chance to defend yourself.
Regardless of what you choose to do, the lender will then file several more statements with the Court and apply to them for a remedy (i.e. some way to get their money back). Only rarely will the Court decide to not issue any order here — as a rule, this only happens if the Court decides you did not default on the mortgage and the bank or lender had no grounds to sue for foreclosure.
Rather, the court will usually issue a Redemption Order. This is to your benefit — it gives you a specified time (usually 6 months, though you or the lender can petition the court to extend or shorten the time) to bring the mortgage up to date and make the payments the Court says must be made. During this period you can effectively stop the foreclosure if you can come up with the money.
(On the other hand, if the court does not believe you have any chance of paying the mortgage balance, it may choose to issue an Order for Sale or Order for Foreclosure.)
If you do not make the payments, then the property will be sold via a method the Court specifies, generally a real estate agent, an ad in a newspaper, or by posting at the courthouse. Any offers that come in must be approved by the court. The Court may decide not to approve a particular sale, in which case the property will remain on the market. If the property receives no valid offers, the Court may decide to issue an Order for Foreclosure (directly transferring the property to the Plaintiff) or an Order for Sale (directly selling the property to the Plaintiff).
No matter the reason, if the Court issues an Order for Foreclosure or Sale, you will have 30 days to leave the property beginning with the day the lender or a third party buyer takes possession of the property.
However, you are not necessarily done with the process if you lose your house. In the event the sale of the property does not pay off the Plaintiff (lender’s) costs, they may choose to sue you for the balance. Generally, they will commence a lawsuit at the same time as they file for foreclosure in order to keep this possibility open. The only time you can be certain the debt is gone is if the court issues an “order absolute,” which does not usually occur.
How Long Does Foreclosure Take?
Canadian foreclosures tend to take at least six months. Like any other legal process, of course, there are plenty of wrinkles and details. In fact, if your mortgage is subject to a Power of Sale instead of a foreclosure, the process goes vastly faster. A Power of Sale can be expected to proceed in a matter of weeks, rather than months.
However, Power of Sale is only used in a few provinces, so here we will focus on the process of judicial foreclosure.
While the rules of foreclosure can seem complex, it’s vitally important for you to understand the points at which you must defend yourself. While many people believe a foreclosure automatically means they lose their house, this isn’t necessarily true.
What happens in a foreclosure process depends on many different factors, including whether you decide to defend yourself and your financial situation. To be sure, if you decide not to do anything, losing your home (and gaining a serious black mark on your credit report) is all but guaranteed.
Unfortunately, not many traditional lenders are likely to be willing to issue a new mortgage to stop your foreclosure. However, there are other options.
The HOS Financial Buy Back program will connect you with private lenders who are willing to redeem the mortgage, either before the process starts or during the Redemption Period. These lenders do not care about your credit score. Provided you have a steady source of income and at least 10% equity in your home, you may be eligible.
Once the foreclosure process has been stopped, you will be able to continue living in your home without having to fear that it will be taken away from you by the bank. Instead, a portion of your monthly rent payment will go towards a future down payment on a traditional mortgage.
At the same time, while you are in the Refinance Buy Back program, you will also undergo credit mentoring. A credit repair expert will help you bring your credit score back to good health so that, in 2-3 years time, you will be in excellent shape to get a traditional mortgage on your home. This will also help make sure you do not ever find yourself in this situation again.
To learn more about the HOS Financial Buy Back program, contact one of our specialists today. If you are facing foreclosure, you may not have much time — foreclosures contain hard deadlines and missing one may mean losing your home unnecessarily.