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, and it is usually greater than $5,000. The creditor must identify all other secured debts on the property, such as taxes and legal claims, for resolution.
A creditor will only proceed with a Sheriff’s sale if they determine 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, mortgages are paid off first, followed by other debts using the property’s equity. Typically, properties sold in Sheriff’s Sales fetch less than their market value in an open sale.
Any creditor in Ontario who has not been paid an agreed-upon sum according to the terms of the debt may file a Writ of Seizure and Sale. 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 an officer of the court. After four months, the local sheriff’s office may be directed to sell the property, but the actual sale may only happen 6 months after the writ is filed.
These lenders generally require that the debts on the property do not exceed 80% to approve a mortgage. If you cannot be approved for a mortgage, then selling the property may be your best option.
Need advice? Trust us to help you stop a Sheriff’s Land Sale. Call 416-499-2122 or email ron@mortgagebrokerstore.com and gain expert advice!
