Buyer’s Guide: Judicial Sales, Court Ordered Sales, Foreclosures (part 1)

Buyer Beware hardly begins to describe purchasing a judicial sale.  

Court ordered sales are carried out under the Court of Queen’s Bench and the listings are usually accompanied by the following wording:

“Property is sold on “As is” “Where is” condition. No warranties or representations whatsoever. Schedule “A” shall form part of this Purchase Contract. Offers must be left open for a minimum of ___ days. All offers are subject to the Court Approval. The completion day will be __ days after Court Approval and Acceptance of offer.”

You may encounter some of the following:

  • No access to property / no lockbox / no showings
  • No RPR provided
  • Mortgage company is making NO warranties or representations whatsoever including the measurments
  • Former Owner still occupying Property
  • The court will not accept any offers that have any representations and warranties in them, nor will the court provide any representations and warranties.
  • All chattels are subject to schedule A, and are “As-is, where-is”
  • Possession / Completion Day to be determined by the Court
  • No buyer’s conditions.  Offer must be unconditional

 –

Here’s what “Schedule A” that is attached to the Purchase Contract reads as: (The vendor would be Court of Queen’s Bench)

SCHEDULE A

THE FOLLOWING TERMS AND CONDITIONS SHALL APPLY TO AND SHALL FORM PART OF ANY AGREEMENT OF PURCHASE AND SALE TO WHICH THIS SCHEDULE IS ATTACHED.

  1. Where there is any conflict or discrepancy between the terms and conditions in this schedule, and the terms and conditions in the Agreement of Purchase and Sale attached, the terms and conditions in this schedule supersede and all apply in place of such other conflicting terms and conditions.
  2. Purchaser shall not call for the production of, and the Vendor shall not be required to produce any survey or real property report nor shall the Vendor give any representation and warranties with respect to the location of the building(s) on the property.
  3. On closing, the Purchaser shall accept title and such conveyance shall not be deemed to contain any covenant except the covenant that the Vendor has done no act to encumber the lands.
  4. The Purchaser acknowledges that no representation or warranties have been made or are made or given by the Vendor or anyone on its behalf to the Purchaser as to the condition of the property being conveyed to the Purchaser.  The Purchaser acknowledges that it has inspected the property and the property shall be conveyed to the Purchaser on an “as it?”/”where is” basis.  The Purchaser shall not call for compliance with or satisfaction of any work orders, deficiency notice, orders to comply, or any other Building Code, Fire Code, or Regulations, whether environmental or otherwise, and whether opposed by law, equity or any Federal, Provincial or Municipal Laws, rules or regulations or any regulatory authority.
  5. The Purchaser acknowledges that no chattels are being sold, transferred or conveyed hereunder.  Further the Purchaser acknowledges that the Vendor is not responsible for the removal from the property of any chattels thereon.
  6. The Vendor makes no representations or warranties as to the absence or existence of urea Formaldehyde Foam Insulation

Urea-Formaldehyde Foam Insulation (UFFI)

This is referred to in #6 of Schedule A. 

UFFI was developed as an improved means of insulating difficult-to-reach cavities in house walls.  During the 1970s, when concerns about energy efficiency led to efforts to improve home insulation in Canada, UFFI became an important insulation product for existing houses. Most installations occurred between 1977 and its ban in Canada in 1980.  For more information on UFFI, visit CMHC

We may be seeing more of these judicial sales in the coming months and years.

Bank of Canada – December 2008 Financial System Review

With household balance sheets under pressure from weak equity markets, softening house prices, slowing income growth, and a record-high debt-to-income ratio, a severe economic downturn could result in a substantial increase in default rates on household debt.

Household indebtedness could act as a channel of contagion spreading losses through the Canadian financial system and causing a further tightening of credit conditions. The impact on the balance sheets of financial institutions would, however, be substantially mitigated by mortgage insurance and the associated government guarantee.

Because of the risks involved in purchasing such a property, it is imperative to discuss with your real estate lawyer what these conditions and terms mean for you.

In Part 2, we will see what sort of Offers the Court of Queen’s Bench has accepted compared to the asking price over the past year.

2 responses to “Buyer’s Guide: Judicial Sales, Court Ordered Sales, Foreclosures (part 1)

  1. Incoming Real Estate Chief sees stability ahead
    Calgary Herald, January 20 2009

    Question: How would you describe the real estate market in 2008?

    Answer: It was an interesting market in 2008. We went from a seller’s market to a buyer’s market and we saw sales drop, listings go up. But we maintained our average sale price and median sale price. They stayed fairly steady.

    Mike says: From an average high of $479,564 in May to $417,398 in December. A median of $428k in February to $380k in December. $50k-60k range steady-ish.

    Q: What is going to happen this year?

    A: In a general sense, we probably agree with the Royal LePages and the Re/Maxes and the CMHC (Canada Mortgage and Housing Corp.) that things are going to stabilize this year.

    Mike says: We?

    Q: What does that mean?

    A: Our listing count is probably going to go up in the spring. But I don’t think it’s going to go as high as it did last year. Sales will be probably a bit slow to start with, but they’ll pick up later on. And it depends on the weather, doesn’t it?

    Mike says: I’m hoping the weather comment was just tongue-in-cheek. It’s hard to tell in print. And you can replace “our listing count is probably” to “our listing count is assuredly going to go up in the spring.” There isn’t any question about that. The question is whether sales will keep pace with the new listings.

    Q: Has the market hit bottom?

    A: All of a sudden we’re seeing some buyers come out again and start looking for houses. I think they want to buy before the market starts to go up again.

    Mike says: I don’t believe we’ve hit the bottom. There might be a temporary uptick this spring, but when the full weight of the inventory hits and sellers realize they aren’t getting any offers, prices will drop. Those that are serious about selling will be aggressive or will be receptive to lower offers. Other sellers might simply not be able to reduce their price because they’d be “underwater”. They’ll probably hang on, waiting for a return to a more favorable sellers market, hoping for someone to bite at their price. There are simply too many variables to paint the Calgary real estate market with sweeping generalizations. Some sellers are absurdly overpriced, while at the same time deals pop up and are quickly absorbed.

    Q: What’s the biggest challenge for the industry this year?

    A: We still have some inventory to eat up. There’s still some new homes out there that have to be sold. And I think that’s going to level out.

    Mike says: 11.9 months worth of SFH inventory and climbing in Calgary. Chestermere at 25 months. Airdrie at 9.5 months. And that’s just the homes on MLS.

    Q: Will 2009 be a buyer’s or seller’s market?

    A: I think we’re still in a buyer’s market at the beginning of 2009, but I see it going into a balanced market, which is better for both the buyer and the seller.

    Mike says: I think we’re in a buyer’s market too. (Tongue in cheek!) I see it going into a balanced market too, but it’s too soon to say whether we’ll see this in 2009. We’ll have a much better picture this spring when peak inventory meets peak demand (historically)

    You have to understand that her job is to represent all the agents, and you can bet many would be furious if she came out and said, “This might be a bad year. Sales are down. Inventory will be back around record levels. Financing approval is difficult to obtain. Unemployment is low in Alberta but we’re only 1 month into this recession and haven’t yet felt its impact. Why not wait a bit and see how this economic situation unfolds before deciding to buy?”

    You can read the full interview here. I just wanted to add my opinion to some of the questions posed. 😛

    In other news, with the BoC slashing their key rate again, some banks actually moved quickly this time. For example, RBC is offering clients these special rates:

    • 4 YEAR FIXED RATE @ 4.29%
    • 5 YEAR FIXED RATE @ 4.39%

  2. Pingback: Odds and Ends - Edmonton Housing Bust

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