Tips for Buying a Montreal Repossession

Tips for Buying a Montreal RepossessionTips for Buying a Montreal Repossession

If you’re thinking of buying a repossessed property in Montreal, then there are a few things you should know before you make an offer.

1) You are not buying a repossession from an individual homeowner. The property has been repossessed by a bank or other lending institution and you are now buying the property from them. Usually, since the lending institutions do not have the facilities or desire to manage the repossession, the property is being sold by a bailiff or as we say in Montreal, a Huissier de justice acting on behalf of the institutions.

2) You must check the background of the property. If a property is sold as a repossession it means that the previous owner was financially stressed and for one reason or another stopped making the necessary payments to continue holding the property. Because of the financial distress, it is obvious to assume that the previous owner also neglected to do necessary repairs to the property, pay annual taxes on the property or neglect to pay workers who may have made renovations on the property. There may be outstanding liens on the property, outstanding taxes, structural problems associated with the property, etc…

3) Does the property have a clean title? Sometimes it may be unclear as to who the actual owner of the property is. Make sure the Huissier de justice and/or the lending institutions can show you proof that they are the actual and only owners of the property and they the previous owner has no ability to contest the sale or the ownership.

4) Certificates of location, soil tests, evaluations, inspections, sale documents, mortgage documents, taxes…. it’s all on you. You have to pay all the costs to get these documents and to make certain that they are up to date. This can easily add another 3 to 4 thousand dollars to the sale price. It is likely that the lending institutions will not have any of these documents, and really, even if they had some of the documents, would you trust them anyway?

5) The deposit! The lending institutions will almost always require that you submit a deposit along with any offer. You will be required to give the deposit with the offer, not after! If the offer is rejected, you get the deposit back. Usually the deposit is about 5% of the price that you submit. If you do not submit the deposit, your offer is immediately rejected.

6) Conditions in the offer – Usually, when you make a promise to purchase on a non-repossession property, you can make you offer conditional to certain clauses. You may want a property inspection, inspection of co-ownership documents, conditional to the sale of you own home, evaluation reports, financing… in a non repo case, you can make the offer conditional to almost anything. However, with a repossession, the more conditions that you put, the less chance that you have of actually getting the place. The lending institutions or Huissier de justice will not want to waste time on “conditions” they just want a quick sale. Usually, they will gladly accept an offer that if a few thousand dollars lower than other offers if the buyer is paying cash (no financing conditions) or not requesting and inspection.

7) Get ready to wait! Once you have made an offer on a repossessed property you can expect to wait a while before getting a response. Usually a promise to purchase must be open for at least 7 days before the bank will even look at it. The banks do this in order to get more than one bid for the property. So, you make an offer, after 7 days that bank looks over it, then the bank either makes a counter offer or accepts or refuses you offer. However, the acceptation itself can take a few weeks since there are various layers of bureaucracy which the offer must pass through. Have patience.

8 ) Sold without legal warranty! Any property which you purchase through a repossession will be sold without legal warranty at the risk and peril of the buyer. This means that the seller is not liable for any defects or deficiencies associated with the property. Foundation cracked, too bad. Roof leak, too bad. Mold problem, too bad. A quote taken directly from the ACAIQ website “should the buyer discover a defect of which they were unaware, they will have  no recourse against the seller, unless they can demonstrate that the  seller acted in bad faith by purposely hiding a defect of which he was  aware.” Buy at your own risk. Do an home inspection, but know that the risk is always there.

 

 

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