The seller is holding my mortgage and now threatening to sell my home — what are my rights?
A vendor take-back (VTB) mortgage is a mortgage where the seller, rather than a bank, lends you part of the purchase price and takes a registered mortgage against the property. VTB mortgages are governed by the same rules as institutional mortgages under Ontario's Mortgages Act, so the seller-lender has the same rights and you have the same protections as in any mortgage relationship.
If you have missed payments and the seller-lender is threatening power of sale, they must follow the required statutory process. For a residential property, this includes serving a proper notice of default (often called a notice under section 22 of the Mortgages Act) giving you at least 35 days to bring the mortgage into good standing. Only after that period has expired without cure can the lender proceed toward sale.
You have a right to redeem — to pay out the full outstanding balance — at any point before the power of sale is completed. If you can bring the arrears (missed payments plus costs) current before the notice period expires, you can stop the process. If you cannot cure the default but believe the lender is not following proper procedure, you may apply to court for relief.
Speak with a real estate lawyer immediately if you receive a default notice. Time is short, and there may be more options than you realize.
Key takeaways
- A VTB lender has the same legal remedies as a bank under Ontario's Mortgages Act.
- At least 35 days' notice of default is required before power of sale proceeds.
- You can stop the process by paying the arrears and costs within the notice period.
- Seek legal advice immediately on receiving a default notice — time limits are strict.