What Is a Redemption Period in Alberta Foreclosure?

The redemption period is your window to pay what the court says is owing and keep the home. It is one of the most important parts of an Alberta foreclosure.

This article explains how long the period usually is, how the Court can change it, and what to understand about the cost of redeeming.

This article covers the law of Alberta.

What redemption means

Redeeming means paying the amount the court order says is owing so that the foreclosure ends and you keep the property. If you do not pay as ordered, the order nisi provides that the land is offered for sale at a time and place the Court sets.

Foreclosure of an Alberta mortgage is governed by Part 5 of the Law of Property Act together with the Alberta Rules of Court, and the lender's enforcement runs through a court action. In that action on a land mortgage, the lender's right is restricted to the land the mortgage relates to, by sale or foreclosure. Foreclosure matters may be heard by Applications Judges in Court of King's Bench chambers.

How long the period is

The Court may decrease or extend the period. Before the land is sold, an order nisi may also be relieved against by postponing the day fixed for redemption.

How the Court decides whether to change it

For non-farm land the Court may consider your ability to pay, the value of the land including improvements, whether the land has been abandoned, the nature, extent and value of the creditor's security, your earning capacity, and whether the failure to pay was due to temporary or permanent unemployment or other conditions beyond your control.

For farm land the factors differ, and include whether the failure to pay was due to hail, frost, drought, agricultural pests or other conditions beyond your control. If a judge postpones the redemption day, an appeal is allowed only on the ground that the judge's discretion was not exercised judicially.

When the period does not apply

• An order to which you have consented.
• A mortgage given by a corporation.
• A National Housing Act mortgage or an insured high-ratio mortgage.
• Renewals of those National Housing Act and high-ratio mortgages, and mortgages entered into before that exclusion came into force.

There is also an exception to the corporate rule: an individual who is a transferee of corporate-given mortgaged land, or an assignee of an agreement for sale to a corporation, is still covered by the protections of sections 40 and 41. Any waiver or release of the protections in section 40 is void. A separate rule affects the sale step rather than the redemption period itself: the Court can 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. How these exceptions apply to your mortgage depends on who signed it and how it is insured, so it is worth confirming with a lawyer.

What happens if the period ends without payment

If the amount is not paid as ordered, the land is offered for sale at a time and place the Court sets. The Court may offer the property for sale at a time and place, in a manner and at a price it considers appropriate, and if listing with a realtor is ordered, an approved listing agreement is attached to the order. If the sale fails, the Court may order the land offered again or make a vesting order.

When an order of foreclosure is made absolute, it vests title in the lender free of your right of redemption, satisfies the debt, and entitles the lender to a certificate of title. A few steps along the way are worth knowing about:

• The time to file a statement of defence is 20 days if you are served in Alberta, one month if served elsewhere in Canada, and two months if served outside Canada.
• If you file a statement of defence or a demand for notice, you are entitled to notice of the lender's applications.
• If you file neither, the lender must note you in default before applying for personal judgment or certain remedies.
• Before applying for a redemption order or foreclosure order, the lender must file a certified copy of all current titles and, unless the Court orders otherwise, an affidavit of value (an affidavit of value is not required for a preservation order).
• Before the final order is entered, the lender files and serves the statement of secured indebtedness, sale proceeds, any deficiency calculation, bill of costs and proposed order, and an assessment officer checks and corrects the amounts.

Whether you can be pursued for a shortfall depends on your situation. A lender on an ordinary individual's residential mortgage generally cannot sue on the covenant for payment, but a guarantor or corporate co-borrower can still be pursued, and for National Housing Act or insured high-ratio mortgages the lender may sue on the covenant. The shortfall protections also do not apply to an individual who is or was a registered owner of residential land if neither they nor any family member ever used the land as a bona fide residence while they were the registered owner, such as an investment or rental property, and the individual bears the onus of showing they are not excluded.

What it costs to redeem and what to do next

The order sets the amount owing, which is usually made up of the debt, interest and costs. The specific components are set out in the order, and the Court of King's Bench publishes a Foreclosure Fee and Disbursement Guideline setting the legal fees and disbursements that may be claimed. Ask for a current payout figure rather than guessing.

• Mark the redemption date from the order on your calendar.
• Get a written payout figure and check it against the order.
• Line up refinancing or sale funds early.
• If you need more time, speak to a lawyer promptly about asking the Court to extend the period.

Frequently asked questions