Defaulting on a mortgage is stressful, but it does not mean you immediately lose your home. In British Columbia, the process moves in stages. Knowing what happens at each stage helps you stay ahead of the situation and make decisions that protect your equity.
If you live in Surrey, Langley, Delta, White Rock, Abbotsford, or anywhere in the Fraser Valley, this guide explains the steps you can expect after a default and how to regain control.
What It Means to Be in Default
A mortgage default happens when you break the terms of your mortgage agreement. The most common reason is missed payments, but default can also occur when:
You fall behind on property taxes.
You let home insurance lapse.
You break other terms of the mortgage contract.
Payment default is the most common trigger and the one that usually leads to foreclosure.
1. Missed Payments and Added Fees
The first sign of trouble is a missed payment. Most lenders allow a short grace period, but once payments remain overdue, they begin adding:
Late fees.
Interest on arrears.
Administrative charges.
If payments remain unpaid, the lender moves to the next step.
2. Demand Letter
A demand letter is the lender’s formal warning that the mortgage is in default. It tells you:
The amount you must pay to restore the mortgage.
The timeline to make that payment.
The consequences if you do not comply.
If you cannot pay the arrears, you still have time to act, but the window becomes narrower.
3. Petition for Foreclosure
If the demand letter deadline passes, the lender can file a Petition for Foreclosure in the BC Supreme Court. This starts the legal process. You will be served with the petition, which outlines:
The amount owed.
The payment history.
The lender’s intention to foreclose.
The court process continues even if you do not respond, so ignoring it removes options.
4. Redemption Period
In many cases, the court allows a redemption period. During this time, you can:
Pay the arrears.
Refinance the mortgage.
Sell the home voluntarily.
This period is often the owner’s best opportunity to solve the problem before losing control of the timeline.
5. Order for Conduct of Sale
If the arrears remain unpaid, the lender can ask the court for an Order for Conduct of Sale. This gives the lender, or another party, authority to list the home for sale under court supervision.
The home is then:
Listed on MLS.
Shown to buyers.
Sold through a court approval process.
The owner no longer controls pricing or timing once this order is granted.
6. Court-Approved Offer
Offers are presented to the court for approval. Competing buyers may submit sealed bids on the court date. The judge approves the best offer, and the sale moves ahead.
7. Distribution of Sale Proceeds
After the home sells, the proceeds are used to pay:
Property taxes.
The mortgage balance and lender’s legal fees.
Any other registered creditors.
Remaining equity to the homeowner.
Many owners are surprised to learn they still walk away with equity, even after defaulting.
Can You Stop a Default From Becoming a Foreclosure?
Yes. Many homeowners stop foreclosure before it begins through:
Open communication with the lender.
Refinancing with another lender.
A voluntary sale before court involvement.
The earlier you act, the more options you keep.
How Mansour Real Estate Group Helps
A mortgage default is a financial emergency, but it is also a solvable one. Our team helps you:
Understand your home’s true value.
Determine whether refinancing or selling is the better path.
Coordinate with mortgage brokers, lawyers, and lenders.
Sell strategically if needed to protect your equity.
You do not have to navigate this alone. With proper guidance, you can avoid a court-driven sale and move forward with stability.
About Mansour Real Estate Group
The Mansour Real Estate Group, led by Mohamed Mansour, MBA and Associate Broker, is a top performing real estate team in the Fraser Valley. With more than 21 years of experience and over $750 million in completed sales, the group is trusted for divorce, estate, downsizing, and family related property transactions across Surrey, Langley, Delta, White Rock, and Abbotsford.
