10. How the Sale Proceeds are Distributed to the Bank and the Owner

| POS Overview | Bank Options | Legal Aspects| Standard Charge Terms | POS Considerations | Quit Claim | Foreclosure | Power of Sale | Issues | Sale Price | POS Process | POS appropriate? | Clauses in Offer | How will Lindsay Protect you? | Conclusion

• prior encumbrances are paid first, even if 2nd mortgagee sells via POS the 1st mortgagee would be paid out first from the proceeds of the sale
• costs and expenses are paid next
• mortgage debt is paid
• any surplus is paid to subsequent encumbrancers and finally
• any surplus from this is paid to the owner

• in this case the bank/mortgagee/lender can sue the owner/mortgagor or any guarantors for the deficiency
• these are concurrent remedies and under POS the bank can 'sell and sue', meaning they can sell the property and still retain the right to sue the owner

What are the rights of the owner and subsequent encumbrancers in a Power of Sale?

• they have the right to insist that the requirements under the Law and under the POS provisions are strictly adhered to, that notices are sent out at the required times and using the prescribed format and forms
• they have the right to relief before the sale and upon payment of the outstanding debt, not necessarily the accelerated interest, the power of sale comes to an end and they retain the property
• they have the right to renegotiate the mortgage in an attempt to help their financial situation such that they can afford the payments and retain the property
• after the sale they have the right to go to court and claim an improvident sale, which means that they file a notice of claim in the court that the bank undersold the property.  This is every bank/lender/mortgagee's worst nightmare if they receive notice of an improvident sale since the bank must defend this action, using the appraisals of course, but this procedure may create unwanted negative press and poor customer relations

The next section will discuss the analysis that is necessary when a bank is contemplating it's mortgage remedies and deciding on power of sale

This series of articles about Power of Sale Properties, Foreclosures and advice when you purchase a power of sale property is brought to you by Lindsay Schenk  Please understand that these are my personal thoughts and experiences, do not use my information herein as legal advice and always professional seek legal advice on any issue pertaining to real estate and especially Power of Sale.

| POS Overview | Bank Options | Legal Aspects| Standard Charge Terms | POS Considerations | Quit Claim | Foreclosure | Power of Sale | Issues | Sale Price | POS Process | POS appropriate? | Clauses in Offer | How will Lindsay Protect you? | Conclusion

If you have any questions or require further information about Power of Sale properties or anything to do with real estate, please send me an email

I can assist you with all of the complexities when you purchase or sell your next home.  Please don't hesitate to email me

Thank you,
Lindsay

You may read more about Power of Sale, Bank Sales and Foreclosure Properties

or go back to list of Real Estate Helpful Articles

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Sign up to receive Foreclosures, Power of Sales and Bank Sales for MLS listings and properties in Mississauga and Oakville Would you like to receive the new residential Power of Sales or Bank sales or Foreclosures in the Mississauga, Toronto, Oakville and GTA areas?  This would include new power of sale and bank sale listings as they are added to the MLS database system.  You may fill in the fields below and click "Sign Me Up!"   What is a power of sale property? POS disclaimer Your Email: Your Name:       By submitting this form you are agreeing to these terms.  Everyone who fills out this form is now automatically signed up to receive my real estate newsletter.  You can always unsubscribe after you receive your first issue.  It could be worse!   You may read the latest issue of my On-Line Real Estate Newsletter before you decide. Yes, I agree to the above   I would have signed up anyway Yes, I agree, but I would prefer not to sign up Agents and Realtors beware You will receive a very fast answer from Mark.  Thank you and have a great day! Definition of Foreclosure or Bank Foreclosures:  A situation in which a homeowner is unable to make principal and/or interest payments on his or her mortgage, so the lender, be it a bank or building society, can seize and sell the property as stipulated in the terms of the mortgage contract. Power of Sale and Tax Sale properties - questions and answers What is a Power of Sale Property? When a borrower defaults on a home mortgage, the lender may attempt to recover its losses by selling the property under power of sale. Definition of Power of Sale:  A clause commonly inserted in a mortgage and deed of trust that grants the creditor or trustee the right and authority, upon default in the payment of the debt, to advertise and sell the property using standard methods such as the MLS or at public auction, without resorting to a court for authorization to do so and without actually taking possession of the property. Once the creditor is paid out of the net proceeds, the property is transferred by deed to the purchaser, and the surplus, if any, is returned to the previous owner (the debtor).  The debtor is thereby completely divested of any interest in the property and has no subsequent Right of Redemption—recovery of property by paying the mortgage debt in full once title has transferred to the new buyer. You will often see advertisements about Court Auctions, Pre-Foreclosures, Homeowners in Bankruptcy, HUD Homes, VA Homes, Government homes and similar sounding wording.  In my experience, many of these types of investment property opportunities come out of the US and are not as common here in Ontario.  In our trading area, most of the POS, Tax Sale properties or foreclosure properties are put on the MLS before they reach the point of foreclosure.  The reason for this is that our provincial laws are very strict about the procedure and marketing of a power of sale property and the company or person who is initiating the power of sale must do their best to obtain what is called TRUE market value as opposed to fair market value for the property, otherwise if the property is sold too far under TRUE market value, the owner could sue them for the difference.  Another reason is because power of sale is much less expensive remedy for the lender to attempt to get their money back. What's an estate sale? What is a Distressed Sale?   Why fix up run-down homes?  Sadly for the previous owner, the answer is simple: Your potential accelerated wealth creation. Adding value to run-down homes through quick cosmetic rehabs is one of the most powerful leverage tools available to property investors.  Traditional 'buy and hold' strategies are too slow for the investor looking for accelerated wealth creation.  On the other hand, buy and hold strategies show strong price growth over time and seem to work well here in Ontario and the GTA. Please understand that these are my personal thoughts and experiences, do not use my information herein as legal advice and always professional seek legal advice on any issue pertaining to real estate and especially Power of Sale. You may use this form to subscribe to automatically receive power of sale and bank sale listings in Mississauga, Oakville and the GTA.