Well, in the last 48 hours we have had a crash course on Power of Sale properties.
The Bank has 3 options when an owner stops making mortgage payments.
1) attempt to obtain title of the property by accepting a Quit Claim Deed from the owner. (not common in Ontario)
2)initiate a foreclosure action through the courts in order to gain title back to the property.(Popular in the USA)
3) sell the property under Power of Sale. (Most common in Ontario because not only will the bank attempt to get all their money back through the sale but the bank also retains the right to sue the owner for payment of the outstanding debt. If the bank sells the house for MORE than is owed, the homeowner pockets the difference.)
What's important to note, is that the homeowner retains the rights of the property right up until the closure of the sale. And right up to the last minute they can bring their arrears up to date or get re-financing and therefore retain their home.
Also, the homeowner can refuse to vacate. Which means that you as the buyer will have to get a sheriff's warrant after the sale closes. Please note, they will not force the homeowners out in the winter months, so be forewarned you might not be able to move in right away!
So as a buyer, you don't really have typical buying rights. You are best to wait until the home is vacant, and then purchase a POA.
Of course, their is the karma aspect too. It somehow seems awful buying someones farm that they lost.
So we found a POA, and we REALLY like it. But the homeowners show no signs of leaving. So now what?