Buying Power of Sale Properties in Mississauga
January 6th, 2008
Power of Sale
When a borrower defaults on a home mortgage, the bank/lender has the right to recover its losses by selling the property using the Power of Sale clause contained in the mortgage.
Power of Sale clause grants the creditor or trustee the right and authority, upon default in the payment of the debt, to advertise and sell the property through any means at it’s disposal, usually Toronto MLS in Mississauga Toronto or at public auction, without resorting to a court for authorization to do so.
Once the creditor (mortgagee) 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 debtor (original owner). The debtor is thereby completely divested of any interest in the property and has no subsequent right of redemption.
Power of Sale (POS) CAveat emptor:
Before pricing Power of Sale property banks normally approach at least 2-3 appraisers. Mortgagee (financial institution) then adds up their margin for negotiation etc. (can be 5-10% or more) to the appraised price and put the property for sale.
Thus, one is not always getting a great deal with Power of Sale properties.
When you buy a power of sale property, you are buying it “as is”, with no warranites with respect to state of repair of the premises, inclusions of chattels or fixtures, or ownership of fixtures or appliances.
Sometimes disgruntled mortgagors (home owners) purposely harm the property.
The mortgagor (original owner) has right to redeem the property up to the time of waiver or expiration of all rights of termination or fulfilment of all conditions. Putting buyers in the awkward position as their agreement of sale can become null and void. Buyers deposit is refunded without deductions in the above scenario.
One should seek legal advise when approaching Power of Sale properties, work closely with professionals who represent buyers and not the mortgagee/bank.
If you are looking to buy a power of sale property in Mississauga, let me know. I can send you power of sale listings that can match your needs and wants. I will make sure that you don’t over pay, you will get comparable prices of similar properties sold in the area.
