How Long Do You Have to Respond to a Foreclosure Claim in Alberta?

Being served with a Statement of Claim on your mortgage is stressful, and the clock starts quickly. Knowing the deadline and what happens next helps you decide what to do.

This article covers the time limits, the risks of doing nothing and the options generally open to you in Alberta. Get legal advice promptly, because your dates depend on how and where you were served.

This article covers the law of Alberta.

The deadline for a Statement of Defence

Under rule 3.31(3) of the Alberta Rules of Court, the time to file a Statement of Defence depends on where you were served.

Check the date and place of service on your documents, and count carefully. If you are close to the deadline, act right away.

What happens if you do nothing

In a foreclosure action, if you file neither a Statement of Defence nor a demand for notice, the lender must note you in default before applying for personal judgment or a remedy under rule 6.5(2). That is a step toward the lender getting its orders without hearing from you.

Ignoring the claim also means you may miss notice of what the lender asks the court to do. Notice of every application must be served on each person who filed a Statement of Defence or demand for notice.

The lender must also follow court steps before key orders. For example, it must file an affidavit of value before applying for a redemption order, a foreclosure order or an order that the property be offered for sale, although the Court can order otherwise. Before applying for a redemption order or foreclosure order, it must also file certified copies of all current titles to the land.

A lender enforces an Alberta mortgage through a court action, and the Law of Property Act does not give it a separate non-court power of sale route. In an order nisi, the Court generally must provide that if the amount is not paid as ordered, the land is to be offered for sale at a time and place the Court sets. This sale-first requirement does not apply where the borrower consents, and the Court may make a vesting or cancellation order without first offering the land for sale where the land was transferred or sold while in default (or within 4 months before default), was abandoned, or is undeveloped non-farm land. If the sale fails, the Court may order the land offered again or make a vesting order.

Your options once served

• File a Statement of Defence, which sets out your response and entitles you to notice of the lender's applications.
• File a demand for notice if you do not plan to defend but want to be told about applications.
• Ask the court to adjust the redemption period. The period is generally 6 months for non-farm land and one year for farm land, and the court may decrease or extend it.
• Pay what is owed within the redemption period, as set out in the order.
• Speak with a lawyer about whether you consented to anything or have defences.

For non-farm land the court may consider your ability to pay, the value of the land, whether it was abandoned, the lender's security, your earning capacity, and whether the default came from temporary or permanent unemployment or other conditions beyond your control. The redemption period does not apply to an order you have consented to.

Some borrowers are treated differently. The six-month redemption period and sale-first protections do not apply to a mortgage given by a corporation. However, they do apply to an individual who is a transferee of corporate-given mortgaged land, or an assignee of an agreement for sale to a corporation. They also do not apply to a mortgage under the National Housing Act (Canada) or to an insured high-ratio mortgage, where the lender may sue on the covenant. Whether any of this fits your mortgage depends on its terms, so it is worth confirming with a lawyer.

A lender on an ordinary individual's residential mortgage generally cannot sue on the covenant for payment. A guarantor or corporate co-borrower can still be pursued for a shortfall. These protections do not apply to an individual if neither they nor any member of their family ever used the land as a residence while they were registered owner, such as an investment property.

Other timing points to know

The lender must serve the Statement of Claim within one year after it is filed, and the court may extend that by no more than 3 months. This is the lender's deadline, not yours, so do not rely on it to avoid responding.

Where tenders are filed in Court, the lender applies for an order confirming the sale or rejecting the tenders, and that hearing is scheduled not more than one month after the date set for receipt of tenders. Actual timelines vary with the facts and the court's discretion, so a lawyer can give a realistic picture.

Foreclosure matters may be heard by Applications Judges in Court of King's Bench chambers. Once an order of foreclosure is made absolute, it vests title in the lender free of your right of redemption. An order nisi may be relieved against by postponing the day fixed for redemption, at any time before the land is sold under an order for sale.

What to do next

• Write down the date and place you were served.
• Calculate your response deadline using the table above.
• Collect your mortgage, renewal papers, payment records and all court documents.
• Do not ignore any later notices or court dates.
• Contact a lawyer quickly to discuss a defence, a demand for notice or the redemption period.

Frequently asked questions