Priority of judgment creditors in a foreclosure proceeding

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Creditors who have obtained judgment against a debtor can register their judgment against any land owned by the judgment debtor.

Normally, if there is more than one such judgment creditor, they share pro rata in the proceeds of a sale of the property, without giving priority to the order in which the judgments were registered: Court Order Enforcement Act, RSBC 1996, c 78 and Creditors’ Assistance Act, RSBC 1996 c 83.

However, this is not the law in a foreclosure proceeding where a mortgage holder brings a court action to force the sale of the property and obtain judgment for the money owed to them. When funds are realized as a result of foreclosure proceedings, they are subject to section 28 of the Land Title Act, RSBC 1996, c 250, which establishes priority by order of registration.

This means that judgment creditors following a sale in foreclosure proceedings are paid in accordance with the order of registration of their judgments, and NOT pro rata.

As a result, judgment creditors are encouraged to register their judgments as soon as practicable to establish priority of their claims, in case the property is eventually sold in a foreclosure proceeding.

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