When can the bank repossess and sell a house in execution?

When a homeowner fails to pay his monthly payments on his/ her home loan, then the bank can start repossession or foreclosure proceedings against such a homeowner. The mortgage bond agreement that is signed between the bank and the homeowner, gives the bank the right to repossess the house, in the case of non-repayment of the home loan.

Rule 46A of the Uniform Rules of the Court states that there should be proper court oversight over the foreclosure process and that the court should consider all circumstances, before a house is sold in execution. In reality, there are no uniform rules that are applied to when and how foreclosure processes should be implemented. Some houses are therefore sold in execution, with very little arrears, while other homes have been in arrears for a very long time and have a high arrears amount.

Under Rule 46A, the court must consider factors such as the debtor’s ability to pay, the value of the property, and any other relevant circumstances. The court may also impose conditions on the sale, such as to provide a reasonable period for the home owner to find alternative housing.

The court is required to set a reasonable reserve price for the sale, considering the market value of the property. The court may also provide for a process to reconsider the reserve price if the property is not sold at the first sale in execution (auction sale).

When a reserve price was not achieved at the auction sale, then the sheriff must submit a report to the court, within 5 days of the date of the auction. If the reserve price is not achieved at a sale in execution, the court must use its discretion and make an order as to how execution is to proceed. The application for reconsideration, is to be instituted by the party in whose favour a judgment has initially been granted and the application for the change in the reserve price, should ideally be heard in open court. The reconsideration application must be served on all the parties. Personal service on the judgment debtor is required.

Foreclosure against a home can be seen as an infringement of the homeowner’s right to adequate housing under Section 26 of the Constitution and foreclosures therefore (which is the repossession and sale in execution against the homeowner) involves a delicate balancing of the rights of the homeowner and the rights of the creditor (bank).

It is advisable to consult attorneys such as Julies Attorneys Inc. on the specific circumstances of your foreclosure and eviction matters.