Mortgage Sales are a function of the property law code and are open to the public. As licensed auctioneers, we often hear the same questions regarding the process because most members of the public have never attended a sale. The three questions we get in regards to Mortgage Sales fall into one of three categories:
The goal of this blog post is to answer these questions and shed light on a legal process that most members of the public are not familiar with.
The questions we hear most frequently fall into the “What should I know prior” category. Mortgage Sales occur when a financial institution or individual foreclose on a defaulted mortgage, as a result they often are conducted at a courthouse or municipal building to grant access to the public. They are advertised in newspapers and in public publications (if you are in New Brunswick you can find all of them in the provincial publication “The New Brunswick Gazette”) and list the property being sold and both the date and location of the sale. It is important to remember that all properties sold at a Mortgage Sale are sold as is where is, meaning if there are outstanding property taxes, liens, or other encumbrances that have priority over the mortgage they will be your responsibility if you purchase the property. Prior to going, it’s a good idea to research the property at your local Land Registry Office, keep in mind there may be a charge for this service.
The next question that gets posed to us a lot is “What should I bring with me?”. Most Mortgage Sales require a down payment of 10% that needs to be paid upon the property being sold. This down payment can be made by certified cheque, bank draft, or cash. As Mortgage Sales are a form of auction and prices will fluctuate, be sure to have more than 10% on hand. It’s also smart to bring a pen and paper with you to take notes.
Finally, “What do I do during the auction?”. This is actually the easiest part of attending a Mortgage Sale because the auctioneer will read out the rules and regulations prior to conducting the auction, these are called bidding papers. In the bidding papers, the lawyer for the financial institution has outlined how the auctioneer will conduct the auction. After the bidding papers are run through the auctioneer will open the floor to bidding. The financial institution who holds the mortgage (called the Mortgagee) has a right to bid for the property as well and they usually make the first bid. Like all auctions, the property will go to the highest bidder. If you are the highest bidder the auctioneer will want your contact information and down payment to forward to the lawyer, it is up to you to get in contact with the law firm to arrange payment of the remaining price.
Mortgage Sales can be a very attractive option when looking for a home. Hopefully, this blog has provided some answers to these commonly asked questions. When going to one be prepared, have your down payment with you, and pay attention to the bidding papers when they are read aloud. Remember the answers to these questions and you can be successful at a Mortgage Sale.