What Is a Foreclosure?



Foreclosure is a legal process initiated when a homeowner defaults on their mortgage payments, leading to the forfeiture of property rights. It can be triggered by various factors, from overwhelming household debt to life-altering events like job loss or bereavement.
 In Canada, there are two primary foreclosure mechanisms:

Power of Sale

Prevalent in provinces like Ontario, New Brunswick, and Newfoundland & Labrador, Power of Sale allows lenders to sell the property without court involvement if the borrower fails to rectify payment defaults within a specified period. The proceeds from the sale cover outstanding debts, with any surplus returned to the homeowner.

Judicial Foreclosure

Preferred in provinces like British Columbia and Alberta, Judicial Foreclosure involves court intervention throughout the process, potentially extending its duration. Lenders obtain a Certificate of Foreclosure, transferring property ownership, and may pursue legal action to recover outstanding debts.  

Upon receiving foreclosure documents, timely response is critical. Failing to engage can signal acquiescence to the process. Responding within the stipulated timeframe allows homeowners to present their case or seek legal guidance to navigate the complexities of foreclosure proceedings. 

Contrary to common belief, foreclosure doesn't always result in immediate property loss. Factors such as financial standing, willingness to collaborate with lenders, and legal representation can influence outcomes. Early communication with lenders is key to exploring alternatives and mitigating the risk of foreclosure.