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Power of Sale Property – Good Deal or No Deal

I get asked quite a bit about power of sale properties and whether or not there are any good real estate deals out there. The answer is most power of sales are not the best deal out there. We are bombarded with foreclosures and short sales messages from the US market, and I explain to my clients that the process here in Canada is quite different when one defaults on their mortgage. Let me share with you a real life example of what happened on a power of sale condominium unit here is Mississauga.

1) Tammy bought a condominium unit which included one parking spot and one owned locker unit.
2) Tammy refinanced the property two years later and used a different lawyer to register the title. This lawyer neglected to include the one parking spot and locker when the property was refinanced.
3) Tammy defaults on her mortgage payments and the property now becomes a power of sale property.
4) The new owner i.e. the bank, hires a Mississauga Real Estate Agent who lists the property for sale. The listing indicated there was one parking and one locker included as part of the sale.
5) A buyer puts in an offer for the unit, and included the parking spot and the locker. The bank does not provide warranty on power of sale properties so it’s buyer beware. Property is sold “as is, where is”
6) The bank crosses out the parking spot and the locker as this was not on the title. The Buyer accepts the offer with all the changes.
7) Upon closing, the buyer’s lawyer asks about the parking and locker as this is included on the status certificate and declaration documents provided by the condominium. This is when it was discovered that the parking and locker is not included in the sale as the bank does not have title to these elements and hence cannot transfer these over to the new buyers.

When it comes to a power of sale property, buyer beware!!! Use a competent Real Estate Agent who can represent your interest in these matters.

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