February 18th - 2007

Merv’s column: Power of Sale price deemed sound

Canada Trustco started Power of Sale proceedings and obtained two appraisal reports prepared by appraisers holding AACI designations from the Appraisal Institute of Canada.

Canada Trustco started Power of Sale proceedings and obtained two appraisal reports prepared by appraisers holding AACI designations from the Appraisal Institute of Canada.
 
An appraisal from M. B. expressed the opinion that the mortgaged property had a value of $300,000. An appraisal from S. P. expressed the opinion that the property had a market value of $370,000. The property was listed for sale by Canada Trustco for $419,000 on the advice of its real estate salesperson. It was advertised on several Web sites, including mls.ca and OREA’s commercial property database http://www.2ontario.com/.
 
The Bank accepted an offer from McDermott to buy the property for $410,000 and that sale closed. After accepting the McDermott offer, Canada Trustco had also received two letters of intent offering $380,000 and $385,000 respectively. Although the owner/mortgagor alleged that the Bank sold the property improvidently, no appraisal by an accredited AACI Appraiser was tendered to indicate whether, how or why the appraisals obtained by Canada Trustco were unreasonably low. There was no evidence that another buyer would have paid more for the property at the time it was sold other than the bare information of a subsequent sale.
 
The judge found that the evidence of another appraiser, D. R., who is not an AACI accredited appraiser nor a full-time real estate broker, concerning the value of the property to be of no assistance in these circumstances.

Canada Trustco Mortgage Co. v. Casuccio, 2005 CanLII 25887 (ON S.C.)

MERV'S COMMENTS
A mortgagor must prove that the mortgagee did something wrong. This one did not, and will have a judgment against him for the balance owing on the mortgage and about $75,000 in legal costs. Note however, that Canada Trustco wisely listed it with a REALTOR®, put it on the MLS and used OREA's commercial property database - http://www.2ontario.com/.

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