Can a seller demand interest on a vendor take-back note if the buyer pays late?

Yes, if the note or purchase agreement includes a late-payment or default interest provision, since this is entirely a matter of what the parties negotiated and wrote into the vendor take-back documents rather than anything fixed by Ontario law. Sellers commonly build in a specified rate that applies once a payment is missed or overdue, on top of whatever ordinary interest rate the note already carries, precisely to discourage late payment and compensate the seller for the delay.

Where the note is silent on late-payment interest, the seller's position is weaker but not necessarily hopeless — general legal principles around interest on overdue amounts, including pre-judgment interest, could potentially apply if the matter ends up in litigation, though this is a fallback rather than a guaranteed entitlement and depends on the specific circumstances. Because the specific rate, and whether it applies at all, is entirely negotiated rather than standardized, a seller who wants clear protection against late payment should make sure the default interest term is expressly written into the note at the time of the sale, not assumed afterward.