Are you facing legal challenges concerning receivership or understanding various powers of sale aspects? We are here as top-rated, reputable legal advisors to make everything simple. Lenders have two primary methods to receive money from someone who can’t repay a loan. The common methods are the power of sale and receivership. The lender applies these techniques to recover the loan amount. But these two methods are different. Let us explore further details.
The meaning of the power of sale
It gives the lender, like a bank, to sell a property when the owner fails to repay the loan. We, HASHMI LAW GROUP, have experienced commercial litigation lawyers in Mississauga, who regularly oversee these legal issues. Power of Sale involved a few steps:
- There is a 15-day waiting period when the borrower can’t repay the loan installment. Please don’t hesitate to contact us, certified and top-rated commercial litigation lawyers in Mississauga, to understand the detailed legal framework of the process.
- After 15 days, there is a notice period of 35 days. The borrower gets a notice from the lender.
- The lender gets the power to sell the property unit when the borrower fails to repay.
- The lender decides the property price. Also, the lender decides the buyer.
- When the lender sells the property, the lender uses it to recover the loan and legal fees. The borrower can get the remaining money.
Main Features
- It is faster than other strategies.
- Expenses are less.
- There is more control over the selling process.
- There is difficulty in ensuring a fair market price for the property. It can lead to legal challenges.
- When there are complicated issues concerning the property sale, it is not an intelligent method.
The Meaning of Receivership
It is the second way to recover money from a borrower on non-repayment of a loan. There is an independent expert, called ‘receiver’, on behalf of the lender, who handles the property issues and selling the property. The main aspects of the method are:
- The lender appoints the receiver with legal approval, compliant to the mortgage agreement.
- The receiver takes control of the property unit and shoulders its sale process.
- The receiver may need court approval to sell the property.
- There is more surety of selling the property at a competitive market value.
- The borrower receives the money to recover the loan amount.
Main Features
- The court oversees the process. It provides legal protection to the lender.
- The receiver manages the property. The receiver can manage a business or maintain the property value before selling the property.
- The method is effective when selling a complex property like a hotel, factory, or business unit.
- The method is more expensive than the Power of Sale.
- The method takes a longer time.
Which is a better method?
It depends on a few factors. If the property is a residence or an empty plot, Power of Sale is the correct choice. If the property is a hotel or factory, and requires court approval and monitoring, Receivership is the correct choice. You can consult us to get more information.
