Kelowna Real Estate Market News

Guide to Court Ordered Sales in BC



Real Estate Foreclosure transactions, in British Columbia, are a complex area, where unforeseen hurdles can cause serious problems for the Real Estate Agent and the Public.

Foreclosure transactions are quite different from regular real estate transactions, and it’s important to appreciate the differences to avoid common mistakes. 


The starting point is that foreclosure transactions are ultimately subject to court approval. The first offer accepted by a seller/lender doesn’t automatically mean that this buyer will get the property. The approval process encompasses an overarching supervisory role of the courts in relation to the transaction, which in general is handled by a master of the court.


In many cases, the party that has the conduct of sale in the foreclosure requires that many of the standard clauses in a Contract of Purchase and Sale be amended. The amended clauses are generally contained in a Schedule to the contract.

Parties foreclosing are not always banks or financial institutions, but can include private lenders. The foreclosure procedure is commenced by way of the lender obtaining an Order Nisi in court, and once a redemption period has expired, obtaining an Order for Conduct of Sale. Potential purchasers will make offers, and the lender may choose to accept an offer. Ultimately, however, no foreclosure transaction will be finalized until the court has given approval to the sale.


Here is an example of a 'curve ball' in the Court proceedings.

A recent case demonstrates the discretion conferred on Masters in Court.A buyer who retained an Agent for the purpose of putting in an offer for a foreclosure property. The offer was accepted by the party with the conduct of the sale, and subjects were duly removed; however, the offer remained subject to court approval. When the parties appeared in court to obtain approval of the sale, a competing offer to purchase the property was presented by a third-party bidder. The plaintiff was therefore given the opportunity to increase his bid, which was done.


The licensee prepared a revised offer by striking out the previous purchase price on the contract and replacing it with a higher figure. When the new offer was handed back to the court, a copy of the previous subject removal form was not provided. The master expressed concern that the offer presented on behalf of the buyer was not subject-free.


Despite assertions from both the licensee and the lawyer representing the lender that the transaction was subject-free (indeed the subject removal addendum was offered to the court), the master considered the offer to have been made with subjects and therefore not valid. The matter proceeded to several new rounds of bidding, and this buyer was ultimately successful in obtaining the property, 

The moral of this story is, a person seeking to become the successful bidder should be prepared to present a subject-free bid. Even though the lender had accepted the offer weeks before, all new bids should be subject free.


This is just one example of what can happen, so my advice is to make sure you are represented by a Real Estate Agent that is thoroughly familiar with Foreclosure proceedings.


Kind Regards


Trish Cenci


Tel 250 864 1707


Taken from an Original Article By Ryan Dix, Staff Lawyer, Real Estate Errors and Omissions Insurance Corporation




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