Are you a second mortgage lender? If so, you understand the importance of securing your investment. But what happens when your security is at risk? In this blog post, we’ll explore the steps you can take to protect your interests and navigate foreclosure proceedings.
Recently, we encountered a situation where our client’s security as a second mortgagee was in jeopardy. We sought an order for the immediate conduct of sale, but while we didn’t secure an immediate order, we did manage to obtain a redemption period of one month, with an immediate order of sale upon its expiry.
It’s crucial to recognize that while the first lender’s security is typically stable, yours as a second lender could be at serious risk, especially if there isn’t sufficient equity in the mortgaged property to cover both mortgages and associated costs in the event of a forced sale.
Courts typically don’t grant immediate orders for the conduct of sale. However, if you can demonstrate that your security is at risk, they may grant a shortened redemption period. In British Columbia, the normal redemption period for borrowers to refinance or sell the property is six months.
To prove that your security is at risk, you’ll need to submit a comprehensive appraisal of the property to the court. A mere “drive-by” appraisal won’t suffice.
Factors considered by the court include:
- The property’s equity
- Occupancy status
- Listing price compared to appraisal
- Whether it’s occupied or abandoned
If you suspect that your security could be at risk, it’s crucial not to ignore the situation. Procrastination could lead to significant losses. Initiate foreclosure proceedings promptly to protect your interests and mitigate potential losses.
Our foreclosure team, led by Paul J. de Bruyn, is here to assist you in navigating foreclosure proceedings and recovering as much of your investment as possible. Don’t hesitate to reach out to lawyers for guidance and support.
Protect your investment, safeguard your security as a second mortgagee, and take proactive steps to secure your financial future.