Ins and Outs of Court Ordered Property Sales

Written by JF Realty Team

Thursday, 16 February 2012 10:49

Have you ever thought about buying a property that is a Court Ordered sale but didn't know much about it?
Here are the details...

Court Ordered property sales are different than Foreclosures in that the party actually selling the property is The Court, and no home owners are involved at all at that point. The Court has a lawyer representative through which all correspondence related to the sale is managed on behalf of The Court of Queens Bench.

The Court lists the property with a Realtor who then must disclose that it is a Court Ordered sale in the listing, and that the property is sold 'as is' with no warranties or guarantees. Also a special Schedule A document is attached to the listing and must be submitted with all offers received, it is signed by the buyer and insures that they understand and agree to purchase the property 'as is' in legal terms.

So what happens... you have viewed the property, think you would like to submit an offer. You and your Realtor meet to get an offer prepared and sign the Schedule A. Your Realtor is responsible to advise you on all of the details and requirements for a Court Ordered sale. This is critical as they are your representative and are the 'custodians' of your private information as it is submitted to The Court in the form of an offer. In the case of submitting an offer to The Court, there may be a circumstance whereby several offers are received and the Court orders that all offers be disclosed to each potential buyer. This means that the listing Realtor is bound and ordered by The Court of Queens Bench to provide all offer documents to each buyer. NOTE: it is the responsibility of your Realtor (representing the Buyer) to request that private information such as the copy of the deposit cheque be with-held - not the listing Realtor. Any orders from The Court over-ride the Realtor Association's Rules and Regulations.

Case in Point...
Several years ago John listed a Court Ordered sale property - a home in Red Deer. There were several offers received on the property and The Court Ordered that all offers be distributed to each offering buyer as part of the legal process of The Court. A Realtor representing one of the buyers was very upset when they saw that all documents that were submitted with the offer were also distributed, including a copy of the deposit cheque. It was explained by John to the Realtor representing the buyer that it is their responsibility to request the with-holding any of their client's information, not John, the listing Realtor. After many strongly worded emails from the Realtor representing the buyer indicating that this was a breach of the Privacy Act, the sale for the Court continued on. Within one month of the Court Ordered Sale, John received notice that the buyer client had reported him to the Privacy Commission for breach of the Privacy Act as he had submitted the copy of the cheque that accompanied the buyer's offer to all other buyers as instructed by The Court. As it is highly unusual that a citizen would report to the Privacy Commission it is assumed that they may have been counseled to do so by their Realtor who had indicated as much in one of their emails to John - however their Realtor is the one responsible for the protection of their client's information, not John who was in this case representing The Court. After several months of submitting correspondence related to the process of the sale as demanded by the Privacy Commission, John and the Brokerage were cleared of any wrong doing, and in fact, the Privacy Commission restated that the 'custodian responsibilities' for a buyer client is their representative, in this case their Realtor. There were no repercussions for that Realtor since their client did not report them, it is a case of buyer beware, so make sure you use a Realtor who understands their role in representing you.

Ok, now you have submitted an offer, what happens next? The Lawyer representing The Court will have specific instructions for any offers, restating that the property is being sold with no warranties on behalf of the Vendor (The Court), any offers should be unconditional, and how offers will be managed. In the current listing that we have, the lawyer is to be notified of any offers, and they are to be forwarded to the Law office representing The Court. If The Court is 'inclined to accept' the offer then documents are filed to The Court to have it approved and serve notice to all parties - including all offers received to that date. The Court often requests that up to 10 days be provided for offer approvals - this will be important for your contract details in your Offer to Purchase. If your offer is accepted then possession is commonly 15-30 days after date of acceptance... and the property is then yours.

These sales are not complicated, there are ways in which you can decrease your risk as a buyer if you have a knowledgeable Realtor representing your interests.