Bank-mandated sales: buying property through a credit provider's mandate

A bank-mandated or bank-assisted sale usually arises where a property owner is experiencing difficulty meeting their home-loan obligations and the credit provider agrees that the property should be marketed and sold privately rather than proceeding, or continuing, towards a forced sale.

In a typical bank-assisted sale, the registered owner remains the seller. The bank, as mortgagee and credit provider, participates in the process because of its financial interest in the property and may approve the property for an assisted-sale program and appoint or approve professionals to assist with its marketing.

An attorney may, where properly mandated and legally entitled to do so, market the property and facilitate negotiations between prospective purchasers and the seller. The resulting transaction remains a private sale between the registered owner and the purchaser, subject to the terms of the sale agreement and any requirements or approvals imposed as part of the bank-assisted process.

From the purchaser's perspective, the process can look much like an ordinary private property sale. The property is marketed, the purchaser submits an offer to purchase, and, if the offer is accepted and all applicable conditions are satisfied, the property proceeds through the normal conveyancing and registration process.

The important difference is the involvement of the credit provider. Because the property is bonded and is being dealt with under a bank-assisted or distressed-sale arrangement, acceptance or implementation of the transaction may also depend on requirements imposed by the bank.

This type of transaction should not be confused with a sale in execution. A sale in execution takes place pursuant to legal enforcement proceedings and involves the property being sold through the prescribed execution process, ordinarily by the sheriff.