In my previous article, I addressed the recent rise in court ordered sales, the current high number of MLS foreclo s ure listings, and the likelihood that we will probably start seeing far more in 2026.

If you read that article, you might be wondering if purchasing a foreclosure is right for you… maybe it’s a way to score a fantastic deal on some local real estate.

To this, I have two replies: first, show some class. Yes, buyers should have access to these listings, but let’s not forget that these sales are happening because of someone’s misfortune. A foreclosure is never something that a homeowner wants to be involved with and the proceedings can be extremely stressful on a family, often with children involved.

One of my mentors, Chuck Magnus, spent much of his career handling foreclosures, especially on the listing side. Despite the fact that he often represented the vendor, usually a bank or other financial institution, and owed his fiduciary duty to that entity, he was always the first to say: respect the family. Respect the people who are losing their home. This is a tragic time in their life. You may not work for them, but you have a moral duty to treat them how you would want to be treated.

Secondly, a foreclosure isn’t always a fantastic deal. I would say it’s somewhat comparable to those “storage bid” sort of deals. You’re coming in somewhat blind, you don’t have a lot of warranties, and the level of risk is often proportional to the potential reward. There are certainly ways to mitigate this risk, but there will always be some level of risk involved as well as a lot of inconvenience.

In this article I am going to walk you through how a foreclosure, at least in the province of BC, happens. Then I will give details on what the court proceedings look like. Finally, we’ll look at the risks and potential rewards involved and whether or not a foreclosure purchase is a good deal and/or if it is right for you.

BEFORE THE MLS: HOW A FORECLOSURE HAPPENS

Most people imagine a bank hammering a big red “FORECLOSURE” stamp on a file the second someone misses a payment. In reality, lenders are usually reluctant to go down this road.

Foreclosures are slow, paperwork-heavy, and expensive. The lender has to pay lawyers, court filing fees, sometimes property taxes and insurance, and then carry the property while the court process plays out. They’ll try to pass as many of those costs as possible back to the borrower, but they won’t always collect everything, especially if there’s little or no equity left. That’s one big reason most lenders will do a fair bit of triage before they push the big red button.

1. Missed payments

In BC, a single missed payment doesn’t usually trigger a foreclosure. Most mainstream lenders won’t start the formal process until you’re at least a couple of months behind. They may first send reminder letters, make phone calls, or try to work out a payment plan or short-term deferral. If things keep sliding, the lender’s internal “special loans” or “collections” team gets involved. At this stage, they’re looking at:

How far behind you are
Whether you’re responding and trying to catch up
How much equity is in the property
Whether a voluntary sale or refinance might solve the problem

From the lender’s perspective, the best outcome is usually: borrower fixes it themselves by catching up, refinancing, or selling before court is necessary. Foreclosure is the fallback when those options don’t look realistic.

2. Demand letter (the last warning)

Before a lender can start foreclosure proceedings in the BC Supreme Court, they must send a formal demand letter. This letter typically:

Sets out how much you owe (arrears, interest, penalties, and sometimes taxes or fees)
Gives you a deadline to pay (often 30 days or more)
Warns that if you don’t pay or make arrangements, they’ll start foreclosure proceedings

This is the “now we’re serious” letter. Some borrowers ignore it because they’re overwhelmed, but legally it’s a big turning point. If the deadline passes without resolution, the file usually moves from “we might foreclose” to “we are foreclosing.”

3. Petition to the BC Supreme Court

If the demand letter doesn’t resolve things, the lender can start a foreclosure action by filing a Petition for Foreclosure in the BC Supreme Court. The petition:

Names the borrower and anyone else with an interest in the property (other lenders, judgment creditors, sometimes tenants)
Sets out the amount owed
Asks the court for specific orders: judgment on the debt, an Order Nisi, and eventually either an Order Absolute (lender takes title) or Conduct of Sale (permission to list and sell the property under court supervision).

The borrower is served with the petition and has a chance to respond. If they do, they’ll later get a Notice of Hearing with the date and time of the first court appearance, where the lender will ask for that initial order (the Order Nisi).

4. Order Nisi & Redemption period

At the first court hearing in a foreclosure, the lender asks for an Order Nisi. This is the main early order in a BC foreclosure. It usually does three things:

Confirms how much is owed (the “redemption amount”)
Sets a redemption period — the time the borrower has to “redeem” the mortgage by paying it out or selling
Often includes a personal judgment against the borrower for the amount owed

The redemption period is commonly around six months, though it can be shorter (or occasionally longer) depending on the equity situation and the judge’s view of the circumstances. During this time, the borrower still has the chance to:

Refinance
Sell the property in a regular sale
Pay off the arrears and costs in full

If they can pull that off, the foreclosure can be stopped.

5. Certificate of Pending Litigation (CPL)

Once the Order Nisi is granted, the lender normally registers a Certificate of Pending Litigation (CPL) on title. The CPL basically tells the world: “There’s a court fight over this property.” Practically, that means:

The owner can’t just quietly sell the home out from under the foreclosure
Any buyer or new lender will see the CPL on title and realize the court has to be dealt with

It doesn’t mean the property can’t be sold — it just means any sale has to resolve the foreclosure, not dodge it.

6. When the redemption period runs out

If the borrower doesn’t redeem (pay off or sell) within the redemption period, the lender can go back to court and choose one of two main paths:

Order Absolute – the lender becomes the new registered owner; there’s no sale process, and the borrower loses all remaining rights to the property. This is more common when there’s little or no equity.
Order for Conduct of Sale – much more common when there’s at least some equity or when the court wants to ensure the property is properly exposed to the market to get a fair price.

For buyers, the “foreclosure deal” you see on MLS almost always comes out of this second path.

7. Conduct of Sale: when the property can finally hit MLS

An Order for Conduct of Sale is the court order that gives a specific party (often the lender, sometimes another creditor) control over listing and selling the property. The order typically:

Names who has conduct of sale (who’s in charge of the sale)
Authorizes that party to hire a REALTOR® and list the property
Sets or approves the commission structure
May set conditions or minimum pricing expectations

Only after this order is granted can the property be listed like a “normal” listing, which is why you’ll see descriptions like “court-ordered sale” or “as-is, where-is” in the remarks on MLS. From the public’s perspective, this is the first time the foreclosure really shows up: the sign goes on the lawn, the listing hits MLS, and buyers can book showings. Behind that simple “Just Listed” banner, though, there’s already been months of missed payments, legal steps, and court orders.

STEP BY STEP COURT PROCEEDINGS

Once a foreclosure hits MLS, many buyers assume it now works like a normal real estate deal: write an offer, negotiate, remove subjects, close. That’s mostly true, but with one very important difference: the court is the final decision-maker, not the seller. Understanding this distinction is essential, because it explains nearly every frustration buyers experience in foreclosure purchases.

1. The property is listed “subject to court approval”

When you see a BC foreclosure on MLS, it will almost always include language like:

“Court ordered sale – subject to court approval”
“Sold as is, where is”

At this stage, the listing agent works for the party with conduct of sale (usually the lender), but that party cannot accept an unconditional offer outright. The list price is also not necessarily a true asking price. It’s often set to attract interest and establish market exposure, not to signal what the court will ultimately accept.

2. Writing an offer on a foreclosure

Buyers write offers largely the same way they would on a regular listing, but with key differences:

All offers must acknowledge court approval
The completion date may be flexible or court-directed
Subjects must be removed prior to court date
The seller provides no warranties on condition, zoning, permits, or fixtures

You’re buying what exists — not what you hope exists. From the lender’s side, they’ll review offers based on one primary metric: net proceeds. Emotional terms, personal letters, or creative conditions don’t matter: price and certainty do.

3. Competing offers & “best” offer selection

If multiple offers come in, the lender (or their lawyer) will usually choose one to take forward to the court — typically the cleanest, highest-net offer. Important point: The lender does not choose the winner. They choose a recommended offer for the court.

4. The court application for approval

Once an offer is selected, the lender applies to the BC Supreme Court for approval of the sale. This application includes:

The accepted offer
A valuation or market evidence
Proof the property was properly exposed to the market
A summary explaining why the offer is fair

This step is meant to protect the borrower and other creditors. The court’s job is not to squeeze every possible dollar, but to ensure the sale reflects fair market value given the circumstances.

5. The “open courtroom” twist: higher bids can appear

Here’s the part buyers don’t always expect. At the court hearing, any interested party can appear and submit a higher offer. This is called an upset bid. For that to happen, the new bidder typically must:

Offer a materially higher price
Be be subject free
Provide a substantial deposit (usually attached to the bid)

This is why foreclosure buyers are usually advised not to emotionally commit until court approval is granted. Even a “firm” deal can be overtaken in the courtroom. That said, upset bids are less common than people think, especially when the original offer is strong and well-supported.

6. Court decision: approved, rejected, or adjourned

At the hearing, the judge has three basic options:

Approve the sale – the most common outcome
Reject the sale – usually because price or exposure is inadequate
Adjourn the hearing – requesting more evidence or time

If approved, the deal proceeds to completion much like a normal transaction. If rejected, the property usually returns to market — often at a revised price or with different strategy.

7. Completion & possession

Once approved:

Completion dates are fixed
Funds are distributed according to priority (taxes, mortgage, creditors)
The buyer takes title — as is, where is

Possession issues can vary. In some cases the property is vacant. In others, former owners or tenants may still be present, requiring additional legal steps. This is one of the biggest real-world risks buyers underestimate.

DEAL OR NO DEAL? IS A FORECLOSURE RIGHT FOR YOU?

By now, it should be pretty clear that a foreclosure is not what most people imagine it to be. It isn’t a guaranteed bargain. It certainly isn’t an easy or stress-free way to buy real estate. A foreclosure is really about risk versus reward. In some cases, that trade-off makes sense. In others, it doesn’t. The mistake buyers make is focusing only on the potential upside without fully accounting for what they’re giving up in exchange.

Foreclosures tend to work best for buyers who can afford to be financially and emotionally patient. Court timelines don’t care when you need to move. Processes don’t speed up because a rate hold is expiring. If delays, uncertainty, or last-minute surprises are going to keep you up at night, this probably isn’t the right path. Where foreclosures do make sense is for buyers who can absorb inconvenience, accept imperfect information, and take a longer view on value.

This is also where expectations matter. A foreclosure is not priced emotionally. Neither the bank nor the court is trying to “get rid of” the property or hand someone a deal. Their job is to recover secured debt and ensure the sale reflects fair market value under the circumstances. Sometimes that still leaves room for a compelling purchase. Sometimes it doesn’t. There’s no entitlement to a discount simply because the word “foreclosure” appears in the MLS remarks.

What you give up in a foreclosure is protection. In a traditional sale, buyers rely on disclosure statements, representations, warranties, and the ability to renegotiate when issues come to light. In a court-ordered sale, many of those safeguards disappear. You are usually buying as is, where is, with limited ability to revisit terms, limited insight into the property’s history, and limited control over timing. Any perceived price advantage has to compensate for that loss of certainty.

This is why foreclosures tend to be a poor fit for first-time buyers, anyone stretched thin financially, or anyone who needs a firm possession date. The margin for error is smaller, and surprises are more costly. For those buyers, even a modest issue can turn what looked like a “deal” into a very expensive lesson.

I’ll end where I began, because it matters.

Every foreclosure represents someone losing their home. The legal process may be impersonal, but the human impact is not. It’s possible to pursue opportunity without being callous, to negotiate firmly without losing perspective, and to recognize market realities without celebrating someone else’s hardship. How you approach these situations says a lot about you, especially in a local market where reputations carry.

So, deal or no deal?

Sometimes yes. Sometimes no. A foreclosure can make sense when the price truly reflects the risk, when the buyer understands the process, and when the plan doesn’t rely on everything going perfectly. If you’re considering one, work with people who’ve actually been through these files — and who are willing to tell you when to walk away.

That’s usually the difference between a smart purchase and a hard-earned lesson.

Forclosures 101: What BC Homebuyers Need To Know