Possibly, but buyers should approach both types of sales with realistic expectations.

With a court-ordered sale, you're making a genuine commitment to purchase. By the time you compete in court, you need to be prepared to submit an unconditional offer with the required deposit. If the court accepts your offer, you've bought it.

With a City of Vancouver tax sale, the opening price can look extraordinarily attractive, but winning the auction doesn't mean you've bought yourself a cheap Vancouver home. The existing owner has a full year to redeem the property, and redemption is the more typical outcome.

The two processes are almost opposites:

Court-Ordered Sale: If you win, you need to be prepared to buy.

City Tax Auction: If you win, you need to be prepared for the possibility that you won't ultimately get the property.

In either case, the words “foreclosure,” “court-ordered sale” or “tax auction” shouldn't automatically be confused with “bargain.”

The better questions are:

What is the property actually worth? What are the risks? And am I financially and legally prepared for the process?

A court-ordered sale can arise for several reasons, but one of the most common is a mortgage foreclosure.

When a property owner falls behind on mortgage payments, the lender may commence foreclosure proceedings in the BC Supreme Court. The owner is normally given an opportunity to repay the amount owing. If the debt isn't resolved, the court can eventually order the property to be sold.

The property is typically exposed to the market through the MLS® system, much like a conventional listing. Buyers may view the property, where access is available, and submit an offer.

From that point forward, however, the process can be quite different from an ordinary real estate transaction.

This is one of the most important things for a prospective buyer to understand.

By the time a competing buyer submits an offer for consideration by the court, the offer must generally be unconditional and comply with the terms established for that particular sale.

The buyer must also have the required deposit available. In many Vancouver court-ordered sales, this is a minimum 5% deposit provided by bank draft, although the required deposit and form of payment should always be confirmed for the particular property.

There is no opportunity after your offer is accepted by the court to make the purchase subject to financing, a home inspection or other normal buyer conditions.

If the court approves your offer, you've bought the property and are obligated to complete the purchase.

That makes court-ordered sales impractical for many buyers who need a conventional financing condition before committing to a purchase.

Even having a mortgage pre-approval doesn't necessarily solve the problem. Your lender may still need to approve the particular property, obtain an appraisal or impose other requirements before advancing the mortgage funds.

A buyer therefore needs to have financing and legal advice thoroughly addressed before submitting an unconditional bid in court.

Court-ordered properties are generally sold “as is, where is.”

Unlike a conventional sale, the lender or other party conducting the sale may have little firsthand knowledge of the property and may provide few representations or warranties concerning its condition.

Depending on the circumstances:

• Appliances and other chattels may not be included.
• Fixtures or other items may have been removed.
• Access for inspections or appraisals may be limited.
• The condition of the property may change between viewing and possession.
• Vacant possession can sometimes become an issue.

If an owner or occupant refuses to leave, the purchaser cannot simply remove them. Further legal proceedings may be necessary, potentially including a Writ of Possession and enforcement by an authorized court bailiff.

Sometimes a court-ordered property sells for substantially less than its previous purchase price or an earlier asking price.

That doesn't necessarily mean it has sold below its current market value.

The property has generally been exposed to the market, and the court must consider the interests of creditors and other parties when deciding whether to approve a sale.

An extremely low offer isn't necessarily going to be approved simply because it is the best offer received.

I've seen this firsthand. In a previous court-ordered sale involving the Canada Revenue Agency, the offers presented were rejected and the property was returned to the market at a price the creditor was prepared to consider.

Court-ordered doesn't automatically mean bargain. It means a different sales process with considerably different risks.

Bidding begins at the upset price and the highest bidder becomes the tax-sale purchaser.

The successful bidder must then secure the purchase by paying the upset price within the City's required payment period. The City accepts specified forms of payment including cash, debit, certified cheque, bank draft or money order.

Once the upset price has been paid, the successful bidder receives a Certificate of Purchase.

But this is the critical point:

Winning the auction doesn't mean you immediately own the property.

There is a one-year redemption period following the tax sale.

During that year, the existing owner — or another party entitled to redeem the property — can pay the required amounts and rescue the property from the tax-sale process.

The existing owner's right to possession is not affected during this redemption period. The successful bidder cannot simply take possession of the home.

In practice, redemption during the one-year period is the more typical outcome, rather than the tax-sale bidder ultimately acquiring the property.

If the property is redeemed, the City refunds the money paid by the bidder together with the applicable interest.

If it isn't redeemed within the one-year period, the successful bidder is required to pay any remaining balance and the process can then move toward transferring ownership.

A Simple Example

Suppose a Vancouver property has:

Estimated market value: $2,000,000 Tax-sale upset price: $45,000

The $45,000 opening figure doesn't mean someone can simply buy the $2-million property for $45,000.

Bidding could increase substantially at the auction. More importantly, even the successful bidder does not immediately acquire the property.

The existing owner has one year to redeem it.

The City specifically advises prospective bidders to research properties before bidding, but bidders cannot simply enter a property to inspect it. It still belongs to someone else.

The City doesn't provide the kinds of representations about condition or quality that a buyer might expect in a conventional transaction.

A prospective bidder therefore needs to investigate title, zoning, registered charges, property information and anything else that may affect the property's value — potentially without ever seeing the inside of the property.

✔ Maintain the property while it is listed 

✔ File the deceased’s final tax return 

✔ File estate (T3) tax returns if necessary 

✔ Complete vacancy tax declarations 

✔ Keep detailed financial records

Executors can be personally liable for mistakes, particularly unpaid taxes.

I have been involved with court-ordered and estate property sales in Vancouver and can help buyers understand the real estate side of the process, investigate market value, review comparable sales and MLS® history, and prepare for the practical steps involved in making an offer.

Court-ordered and tax-sale transactions can involve significant legal, tax and financing considerations, so appropriate independent professional advice should always be obtained before making an unconditional commitment.

This guide is intended to provide general real estate information and should not be considered legal, tax or financial advice.