What is a Civil Enforcement Sale?
Over the past number of years some listings appearing on the Calgary MLS® System have read "This is a Civil Enforcement Sale". Terms of sale generally include the phrase "Purchase price is for registered 1/2 interest in equity position only". The asking price for these listings usually is well under the market value of the property and generally show Consolidated Civil Enforcement Inc. as the seller of the property. If nothing else, they certainly grab people's attention.
The following description of civil enforcement sales summarizes what is & isn't being offered in these types of offerings. Once buyers understand what is being offered they typically have no interest. Please note every circumstance is different. Should you decide you'd like to write an offer on a civil enforcement property we strongly recommend you speak with a Calgary real estate lawyer who is familiar with this type of offering.
Introduction to Civil Enforcement Sale of Land
An Opinion for Value for Sale of Land is different from an Opinion of Value that a REALTOR would normally provide. A normal Opinion of Value generally focuses on market value. This is the value that is generally provided in an appraisal or normal opinion of value, and is based on data that provides an estimate of what a willing buyer would be prepared to pay a willing seller. Comparable sales available through the MLS system will generally support this kind of valuation. Although an estimate of market value is an important starting point to consider in any valuation, by definition it does not apply to a forced sale.
When Consolidated requests an Opinion of Value, it is primarily interested in a list price and minimum price, terms used in the Civil Enforcement Act.
The Realtor’s Opinion of Value must provide a list price. A list price must be a price that generates sufficient interest to sell the property in a reasonable time frame. This value is generally higher than market value, but sometimes with a forced sale can be equal to or lower than market value. Your experience will assist us in establishing the best value.
The Realtor’s Opinion of Value must also provide a minimum price. A reasonable definition of minimum price is “the lowest price that we might expect to sell this property under circumstances of forced sale.” The following factors must be considered:
- Potential buyers may not be able to enter the property prior to sale
- The buyer will be buying the property “as is”
- Possession of the property may not be given to the buyers on the closing date
- The buyer may require a court order to obtain possession.
Disclosure Of Risk
In some circumstances an enforcement debtor may attempt to pay its debt after the listing has commenced, when the sign goes into the lawn, after an agreement has been signed, or in rare cases, after the transfer has been submitted to Land Titles. The debtor may apply to the courts to stop the process or cancel an agreement.
While Consolidated will use its best efforts to ensure that the Realtor is compensated in the event of an aborted sale, settlement by the debtor or Court ordered cancellation of sale, Consolidated shall not be liable for the payment of commissions beyond those commissions which are received through settlement discussions with the debtor, or which are actually received from sale proceeds.
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