When a homeowner defaults on their loans or fails to make other payments, a creditor may file a request to recover the money by using a Sheriff’s Sale. This action is also known as a “Sheriff’s Sales of Land”, a “Sheriff’s Sale” or a “Sheriff’s Land Tax Sale” when taxes are owed. The property will be sold at an open auction if the sheriff is able to achieve the undisclosed minimum price and the buyer has the 10% deposit. New Sheriff’s Sale listings are posted online each month by the Ontario government and are featured in every issue of the Ontario Gazette.
Sheriff’s Sales are most commonly used by credit card companies or government tax departments to recover money they are owed. Sheriff’s Sales are typically not used by mortgage lenders, as the power of sale process is a much more effective way to reclaim their investment. A creditor will only proceed with a sheriff’s sale if there is a large amount of equity in the property. The cost of processing the sheriff’s sale must also be taken into account which is usually greater than $5,000. Work must be done by the creditor to determine all the other debts secured against the property, including taxes, as well as any other claims or legal complications.
A creditor will only proceed with a Sheriff’s sale if they determine if there is enough equity to pay off all debts. In terms of real estate, equity is defined as the value of the property minus all secured debts on the property. The value of the property must be determined by either a certified appraiser or a real estate broker. The lawyers processing the Sheriff’s Sale must contact all mortgage holders and other creditors to determine exactly how much is owed. Usually, a significant amount of equity must be present in the property in order to pay off all fees. When the property is sold, first all mortgages must be paid off in order then the remaining debts can be paid off using the property’s equity. Typically a property sold in a Sheriff’s Sale will sell for less than if it were to be sold on the open market.
Any creditor in Ontario that has not been paid an agreed upon sum according to the terms of the debt may file a Writ of Seizure and Sale. In order to be able to perform a Sheriff’s Sale, the creditor must submit a Writ of Seizure and sale to the courts. After the creditor files a Writ of Seizure and sale they must wait at least 6 months before the land is sold. All property evictions in Ontario must be done by a sheriff, who is considered to be an officer of the court. After four months the local sheriff office may be directed to sell the property but the actual sale may only happen 6 months after the writ is filed.
In most cases, the creditor that is processing the Sheriff Sale simply wants their money back and will not be open to negotiation. Once they are paid what is owed to them, all legal issues related to the debt disappears and the Sheriff’s Sale is stopped. Generally, the two main ways of getting money to pay the creditor are to either get a new mortgage or sell the property. There are many private lenders that specialize in providing financing to people that are facing eviction. These lenders generally require that the debts on the property do not exceed 80% in order to approve a mortgage. If you cannot be approved for a mortgage, then selling the property may be your best option. Properties that are sold via Sheriff Sale are subject to large fees that reduce the amount the former homeowner will get in the end. By selling the property, the homeowner can avoid these fees. Our team can go over your options and help you decide the best course of action.