How Power of Sale Works on a Mortgaged Home in New Brunswick

Missing mortgage payments is stressful, and a letter mentioning power of sale can make it feel urgent. It helps to understand what the term means and what you can still do.

This article gives a general overview. The exact notice periods, steps and costs depend on your mortgage and the law, so use it to prepare questions for a lawyer rather than as a timetable.

This article covers the law of New Brunswick.

What power of sale means

A mortgage gives a lender security over your home. What the lender may do if you default, including whether and how it can sell the property to recover the debt, depends on the terms of your mortgage and the law that applies to it. How any sale money is applied, and whether anything is left over for you, also depends on your mortgage and the facts, so it is worth confirming with a lawyer.

In New Brunswick, registered land is mortgaged by registering a mortgage in prescribed form, and a mortgage in prescribed form is deemed to contain the prescribed covenants and conditions. Your own mortgage document is therefore the first place to look for what counts as default and what the lender may do about it.

What default can look like

Default does not always mean missed payments. Depending on the terms, it can also include unpaid property taxes, lapsed insurance or other breaches of the mortgage.

Property taxes deserve attention. Each person in whose name real property is assessed must pay the taxes on it, taxes are due when the real property tax notice is mailed, and unpaid amounts attract penalties set by regulation. Tax arrears can add to your problems with a lender.

Notices and timing

Notices matter because they usually set the timeline you are working with. Which steps a lender must take before selling, and the notice requirements and waiting periods, depend on the mortgage and the legislation that governs it, so confirm them with a lawyer rather than relying on a general rule.

• Keep every letter, notice and envelope, and note the date you received each one.
• Check whether the notice states the amount needed to bring the mortgage up to date.
• Look for any deadline in the notice and treat it as firm until a lawyer tells you otherwise.
• Do not ignore documents delivered by a lawyer, sheriff or process server.

Options you may have

The earlier you act, the more options you tend to have. Depending on your situation, these may include the following:

Whatever route you take, a lender's payout generally ends with registering a discharge. Under the Land Titles Act, a registered mortgage can be discharged, in whole or in part or as to any of the land, by registering a discharge of mortgage in prescribed form. Separately, a mortgagee may release a covenantor from some or all covenants by registering a release in prescribed form. If more than one person signed your mortgage, ask how each of them is affected.

Electronic instruments can be submitted only by subscribers, who are Law Society of New Brunswick members authorized to practise law and who have an agreement with Service New Brunswick, apart from stated exceptions. That is one reason a lawyer is usually involved when a mortgage is discharged or a home is sold.

What to do next

• Gather your mortgage, renewal papers and every notice you have received.
• Contact your lender early and ask for the exact amount needed to cure the default, in writing.
• List your income, expenses and any other debts so you can see what is realistic.
• Speak to a lawyer before any deadline in a notice passes.
• Do not sign anything you do not understand.

Frequently asked questions