Enforcing Judgments Against Land: Difference between revisions
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Enforcing Judgments Against Land (view source)
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Foreclosures and enforcement actions are the two main legal proceedings that creditors may bring against a home that a debtor owns. It is important to understand the differences between the proceedings. | Foreclosures and enforcement actions are the two main legal proceedings that creditors may bring against a home that a debtor owns. It is important to understand the differences between the proceedings. | ||
=== | === Difference between foreclosure and an enforcement action=== | ||
'''Foreclosure''' is a proceeding brought by a creditor who has a mortgage interest in a property. Usually, when a person borrows money to buy a home, they have to give the lender a mortgage over the home as security. If the borrower defaults, the lender can bring a legal action to take (or "foreclose") the property and, at the same time, get a judgment for the money owed. See the [[Mortgages and Foreclosure]] section for details. | |||
An '''enforcement action''' is a proceeding brought by an unsecured creditor who has obtained a judgment against a debtor. An unsecured creditor does not have a mortgage as security. The creditor must first get a judgment, and then bring the enforcement action against property owned by the debtor. | |||
==== | === Procedure for an enforcement action=== | ||
====Starting an enforcement action==== | |||
Enforcement actions for the sale of land must be brought in Supreme Court under sections 92 to 113 of the [http://canlii.ca/t/84h5 ''Court Order Enforcement Act'']. These sections provide a code for the procedure for having the property sold. The judgment creditor’s first step is to register the judgment against the debtor’s property in the Land Title Office. | Enforcement actions for the sale of land must be brought in Supreme Court under sections 92 to 113 of the [http://canlii.ca/t/84h5 ''Court Order Enforcement Act'']. These sections provide a code for the procedure for having the property sold. The judgment creditor’s first step is to register the judgment against the debtor’s property in the Land Title Office. | ||
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If the judgment that the creditor is trying to enforce by the sale of land was obtained in Supreme Court, the creditor need only file a Notice of Application in the Supreme Court action between the creditor and debtor. | If the judgment that the creditor is trying to enforce by the sale of land was obtained in Supreme Court, the creditor need only file a Notice of Application in the Supreme Court action between the creditor and debtor. | ||
==== Hearing ==== | ====Hearing of the enforcement action==== | ||
At the first hearing (called a '''“show cause” hearing'''), the debtor must show why the property should not be sold to satisfy the judgment. It is difficult, though not impossible, for debtors to convince the judge to dismiss the creditor’s action. Under s. 96(2) of the ''Court Order Enforcement Act'', if the home of the judgment debtor is on the land, the court may defer the sale depending on how the judgment debtor responds to the terms and conditions, usually [[Instalment Payment Orders|instalment payments]]), set by the court. | At the first hearing (called a '''“show cause” hearing'''), the debtor must show why the property should not be sold to satisfy the judgment. It is difficult, though not impossible, for debtors to convince the judge to dismiss the creditor’s action. Under s. 96(2) of the ''Court Order Enforcement Act'', if the home of the judgment debtor is on the land, the court may defer the sale depending on how the judgment debtor responds to the terms and conditions, usually [[Instalment Payment Orders|instalment payments]]), set by the court. | ||
Most often, the judge makes an order for the next hearing in the process. This is a hearing before a registrar held in a more informal setting. The registrar hears evidence on matters such as the value of the property, what creditors have claims (and for how much) against the property, and the debtor’s financial circumstances. | Most often, the judge makes an order for the next hearing in the process. This is a hearing before a registrar held in a more informal setting. The registrar hears evidence on matters such as the value of the property, what creditors have claims (and for how much) against the property, and the debtor’s financial circumstances. | ||
The registrar writes a brief report, files it in the court file, and sends a copy to both the creditor and the debtor. Then the creditor has to file an application for the final court hearing before a judge. At that final hearing, the judge reviews the registrar’s report and decides whether to make an order to have the property sold. If the order is made, the creditor can proceed with the sale by forwarding a copy of the sale order to the local [[Bailiffs, Court Bailiffs and Sheriffs|court bailiff]]. The court bailiff usually arranges for a real estate agent to sell the property. | The registrar writes a brief report, files it in the court file, and sends a copy to both the creditor and the debtor. Then the creditor has to file an application for the final court hearing before a judge. At that final hearing, the judge reviews the registrar’s report and decides whether to make an order to have the property sold. | ||
=== If an enforcement order is made === | |||
If the order to sell the property is made, the creditor can proceed with the sale by forwarding a copy of the sale order to the local [[Bailiffs, Court Bailiffs and Sheriffs|court bailiff]]. The court bailiff usually arranges for a real estate agent to sell the property. | |||
Under the [http://canlii.ca/t/858w Court Order Enforcement Exemption Regulation], a judgment debtor whose principal residence is located within the Metro Vancouver or Victoria areas may claim $12,000 equity that is exempt from seizure. Judgment debtors living outside these areas may claim an exemption of $9,000 equity in their principal residences. | |||
=== If the debtor shares ownership in the property === | |||
If the debtor’s interest in the land is a joint tenancy or tenancy in common, rather than the entire title, a creditor can still take enforcement action. Essentially, the process is the same, except that if one of the co-owners of the property is not a judgment debtor, then only the interest of the judgment debtor is subject to sale. The buyer/new owner may be the judgment creditor, the non-creditor owner, or a third party. If the new co-owners are not compatible, either one of them may apply for a sale of the entire ownership of the property under the [http://canlii.ca/t/848q ''Partition of Property Act'']. | If the debtor’s interest in the land is a joint tenancy or tenancy in common, rather than the entire title, a creditor can still take enforcement action. Essentially, the process is the same, except that if one of the co-owners of the property is not a judgment debtor, then only the interest of the judgment debtor is subject to sale. The buyer/new owner may be the judgment creditor, the non-creditor owner, or a third party. If the new co-owners are not compatible, either one of them may apply for a sale of the entire ownership of the property under the [http://canlii.ca/t/848q ''Partition of Property Act'']. | ||
== Information gathering== | == Information gathering== | ||
Confirm which parties the creditor is making a claim against. For example, is the claim against one of two spouses? both spouses? guarantors? | ===Learn all the circumstances=== | ||
Confirm which parties the creditor is making a claim against. For example, is the claim against one of two spouses? Is it against both spouses? Is it against guarantors? | |||
Confirm whether any legal action against the debtor has begun. If a legal action has been started, confirm the nature of the proceedings and the stage the proceedings are at. | Confirm whether any legal action against the debtor has begun. If a legal action has been started, confirm the nature of the proceedings and the stage the proceedings are at. | ||
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Consider conducting a Land Title Office search of the debtor’s property to confirm all the charges against the title. | Consider conducting a Land Title Office search of the debtor’s property to confirm all the charges against the title. | ||
===Practical realities=== | |||
The most significant issue in an enforcement action against land is the equity the debtor has in the land. For this reason, you must obtain a realistic appraisal of the property. The most recent statement from the BC Assessment Authority can help. Alternatively, you could use a real estate agent or qualified appraiser. | The most significant issue in an enforcement action against land is the equity the debtor has in the land. For this reason, you must obtain a realistic appraisal of the property. The most recent statement from the BC Assessment Authority can help. Alternatively, you could use a real estate agent or qualified appraiser. | ||
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Based on the case law, there are a number of possible outcomes. In extreme circumstances, the court might be persuaded to dismiss the action at the show cause stage if a sale would produce extreme hardship for one or more of the judgment debtors. | Based on the case law, there are a number of possible outcomes. In extreme circumstances, the court might be persuaded to dismiss the action at the show cause stage if a sale would produce extreme hardship for one or more of the judgment debtors. | ||
The court might be persuaded to order a deferral of the sale at the final hearing when the registrar’s report is considered. Section 96 of the [http://canlii.ca/t/84h5 Court Order Enforcement Act] provides in part: “where a premises situated on the land … of a judgment debtor is the home of the debtor, the court may defer the sale, subject to the performance by the judgment debtor of terms and conditions of payment or otherwise as the court imposes.” | The court might be persuaded to order a deferral of the sale at the final hearing when the registrar’s report is considered. Section 96 of the [http://canlii.ca/t/84h5 ''Court Order Enforcement Act''] provides in part: “where a premises situated on the land … of a judgment debtor is the home of the debtor, the court may defer the sale, subject to the performance by the judgment debtor of terms and conditions of payment or otherwise as the court imposes.” | ||
The court might be persuaded to defer the order for sale to allow the debtor to try to sell the property. The advantage of this approach is that the debtor may be able to get a better price for the property than if the property is sold by the court bailiff. | The court might be persuaded to defer the order for sale to allow the debtor to try to sell the property. The advantage of this approach is that the debtor may be able to get a better price for the property than if the property is sold by the court bailiff. | ||
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* [[Mortgages and Foreclosure]]
| * [[Mortgages and Foreclosure]]
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* [[Instalment Payment Orders]]
| * [[Instalment Payment Orders]]
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* [[ | * [[Lawyers' Fees]]
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{{Consumer and Debt Law Navbox|type = court}} | {{Consumer and Debt Law Navbox|type = court}} | ||
