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what are foreclosure proceedings?
When a borrower fails to make mortgage payments, it can lead to foreclosure. This legal process allows the lender, known as the mortgagee, to seek recovery of the loan through the courts.
how are foreclosure proceedings initiated?
The mortgagee initiates this by filing a petition and serving all relevant parties, followed by applying for an Order Nisi from the court.
what happens after an order nisi is granted?
The Order Nisi typically includes a Redemption Period of six months. During this time, the borrower, or mortgagor, must pay the full outstanding mortgage amount, including interest and costs, to retain their interest in the property. If the mortgagor cannot repay the mortgage within this period, the court may order the sale of the property or issue an Order Absolute, transferring the property title to the mortgagee and removing all subsequent charges. Subsequent chargeholders, such as second or third mortgagees, who risk losing their interest in the property, can apply for Conduct of Sale before the Redemption Period ends. If approved, they can list the property for sale, hoping the proceeds will cover their claims.
what are the typical steps in most foreclosure litigation matters:
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The property owner defaults on mortgage payments to the secured creditor, the mortgagee, who holds a registered mortgage on the property title as security.
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The mortgagee issues a demand for the outstanding amount to the mortgagor and any guarantors.
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Foreclosure proceedings begin with the mortgagee filing a petition and affidavit in court, becoming the petitioner.
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The petition names the property owner, other chargeholders, and interested parties as respondents, who are then served with the documents.
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Respondents have 21 days to file a response if they wish to contest the mortgage's validity, participate in proceedings, or stay informed.
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The petitioner applies for an Order Nisi, serving it to respondents who filed a response.
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If granted, the Order Nisi confirms the mortgage's validity, grants judgment against the mortgagor and guarantors, and sets a redemption period, usually six months, allowing the owner to remedy the default.
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Respondents may request an extension of the redemption period if the property's value can cover the debt.
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If not extended, the petitioner may apply for a Conduct of Sale Order to manage the sale process, including setting the listing price and agent.
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Upon receiving an acceptable offer, the petitioner seeks court approval, providing evidence of the property's market value and sale process. Interested parties can present offers at the hearing, and the court may order a sealed bid process if multiple offers are received.
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The sale is completed, and any surplus funds are paid into court. Respondents can apply for these funds, with priority rules determining entitlement.
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The petitioner files a certificate of sale detailing the distribution of sale proceeds with the court.
