What happens to me and the money if my home is sold under power of sale in Ontario?
If your home is sold under power of sale, the sale money is paid out in a set order, and anything left over after the debts are paid goes to you as mortgagor. That order comes from the statutory power of sale, which does not apply to a mortgage with its own power of sale, so surplus and shortfall handling depends on your charge terms and is worth confirming with a lawyer.
Under that order, proceeds go to sale expenses first, then interest and costs due under the mortgage, then principal, then later encumbrancers by priority, and then certain tenants' rent deposits.
Before a sale, you can be relieved of the default by paying the arrears and the lender's necessary expenses if the whole debt has been accelerated. You can also have the lender's costs assessed by an assessment officer without a court order. Once the power of sale is exercisable, the lender may demand the deeds and documents you hold about the property or its title. Moving out and the effect on your credit depend on your situation, so get advice early.
Key takeaways
- Under the statutory order, sale proceeds pay sale expenses, interest and costs, principal, later encumbrancers and certain rent deposits, with the residue going to the mortgagor.
- Surplus and shortfall handling depends on your charge terms, since the statutory power of sale does not apply to a mortgage with its own power of sale.
- You can have the lender's costs assessed by an assessment officer without a court order.
- Before a sale, you can be relieved of the default by paying the arrears plus the lender's necessary expenses, where the whole debt has been accelerated.