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Foreclosure is when the lender calls in funds advanced under the mortgage due to default by the borrower. Default occurs when the borrower fails to pay, fails to sign renewal documents or the mortgage expires.
Foreclosure is initiated by filing a Petition in the Supreme Court. The Petition must be personally served and the borrower has 21 days to file a Response. The borrower must provide a filed copy to the lender so no steps are taken in the foreclosure without notice to them.
The lender will then seek an Order Nisi to set the value of the mortgage and redemption period. Generally, the courts grant a redemption period of 6 months, but it may be shortened or extended. The borrower can use that period to remortgage, sell or negotiate with the lender.
Once the redemption period ends the lender can apply for:
- Order Absolute – registers title in the Lenders name. No further claims can be made against you for any shortfalls; or
- Order for Conduct of Sale – Lender has the power to sell the house to recoup the money owed under the mortgage. If there is a shortfall, the lender can collect the difference from you.
If you are served with a Petition for foreclosure seek legal advice.
For more information, contact Megan Amanda McLeod at McLeod & Schneiderat 250-492-0907.