What Happens to My Home After Power of Sale Is Completed in Ontario?
After a power of sale closes, the home belongs to the buyer. Once the sale closes, the borrower's right to stop enforcement under section 22 of the Mortgages Act no longer applies, and you are limited to a claim for damages against the lender. A buyer's title generally cannot be attacked over a defect in the sale process where notice was given in professed compliance with the Act, but that protection does not extend to a buyer who had actual notice of the defects.
How long you can stay depends on the facts, so confirm your position with a lawyer promptly. A lender's possession could not be lawful until after the notice of sale period expired, and a writ of possession may be issued only with leave of the court.
Whether any surplus remains depends on the sale price and those debts. If there is a shortfall, a lender's claim on the covenant to repay has a 10-year period that runs from the later of the cause of action or the transfer of your interest.
Key takeaways
- Once the sale closes, the borrower is limited to a claim for damages against the lender.
- A buyer's title is generally protected where notice was given in professed compliance with the Mortgages Act, except for a buyer who had actual notice of the defects.
- A lender must take reasonable precautions to obtain the true market value as of the date of sale, and a hasty or secretive sale can cast doubt on the price.
- A writ of possession may be issued only with leave of the court, and a lender's possession could not be lawful until the notice of sale period expired.