Mortgage Enforcement and Power of Sale

Common situations

A borrower in default on a first, second or private mortgage
A notice of sale received, and questions about how much time remains
A dispute over the amount claimed, including penalties, fees and interest
A sale by the lender at a price the owner believes was too low
Default on a vendor take-back mortgage (see Vendor Take-Back Mortgage Disputes)

How power of sale works in Ontario, in outline

Most Ontario mortgages allow the lender to sell the property if the borrower defaults. In outline, and subject to the terms of the mortgage:

The default must continue for a minimum period before a notice of sale can be given.
A notice of sale must be served on the borrower and others with an interest in the property, giving a minimum period to pay what is owed.
During that period, the lender’s further enforcement steps are restricted.
If the default is not cured, the lender may take possession and sell, and must act in good faith and take reasonable precautions to obtain the property’s true market value at the time of sale.
The sale proceeds pay the costs of sale and the mortgage, then later mortgages and charges, with any surplus going to the owner.

Options for borrowers and owners

Paying the arrears to bring the mortgage back into good standing, where the law allows it
Paying out (redeeming) the mortgage before the sale
Challenging amounts that are not properly chargeable
Negotiating time to refinance or sell privately
A claim for damages if the sale was improvident

Timing

Enforcement timelines are short and fixed. If you have received a notice of sale, the period it describes is already running.

Questions we are often asked

How long does a power of sale take?

It varies. The Mortgages Act sets minimum waiting and notice periods before a sale can proceed, and the time to market and sell the property is added to that. Disputes about the amount owing or the sale process can extend it.

Can I stop a power of sale?

Usually by paying what is owed, or by bringing the mortgage back into good standing where the law allows it, before the lender signs a binding agreement to sell the property. A court can intervene in limited circumstances, for example where the notice was defective.

What is an improvident sale?

A lender selling under a power of sale must act in good faith and take reasonable precautions to obtain the property's true market value at the time of sale. If it does not, the borrower may claim the difference between that value and the price obtained.

Can the lender add penalties and legal fees to what I owe?

Only to the extent the mortgage and the law permit. Some charges added during enforcement can be challenged.

General information about Ontario law, not legal advice about your situation. Time limits can be short; if you are unsure, speak with a lawyer promptly.