- A lender cannot give notice of power of sale until the default has continued for at least 15 days, and the sale cannot take place until at least 35 days after notice.
- Before the sale, a borrower in default may get relief by paying the arrears (or fixing the broken term) plus the lender's necessary expenses.
- Sale proceeds are paid out in a set order, and any surplus goes to the borrower.
Falling behind on your mortgage is stressful, and the words "power of sale" can make it feel as if your home could be gone overnight. In Ontario, the Mortgages Act sets out minimum waiting periods that a lender using power of sale has to respect, and it gives you a way to stop the process in many situations.
This article explains those minimum timelines in plain language, what a borrower can do to stop a sale before it closes, and how the money is divided if the home is sold. It is general information, not advice about your own mortgage, which can only be assessed by looking at your documents.
What power of sale means
Power of sale is a way for a lender to sell the mortgaged property to recover what it is owed when a borrower is in default. It is usually written into the mortgage document. The lender sells the property and applies the money to the debt, following the rules in the Mortgages Act.
Power of sale is not the only option a lender has. A lender may also choose to enforce its mortgage by going to court instead. Which route is used depends on the mortgage and the circumstances, so read every document you receive carefully and keep copies.
The minimum notice periods
Under section 32 of the Mortgages Act, a lender may not give notice of power of sale until the default has continued for at least 15 days. The sale cannot take place until at least 35 days after the notice is given.
| Step | Minimum under the Mortgages Act |
|---|---|
| Default before notice can be given | At least 15 days |
| Time from notice to sale | At least 35 days |
These are statutory minimums, not a promise of how long you will actually have. In other words, the 15 days is counted before the lender may give notice, and the 35 days is counted from the day notice is given. How this applies to your mortgage depends on your situation, so it is worth confirming with a lawyer.
If you receive a notice, write down the date on it and the date you received it, and keep the envelope or email.
How a borrower can stop the sale
Under section 22 of the Mortgages Act, a borrower in default may get relief before the sale by paying the amount in arrears, or by performing the covenant (the promise in the mortgage) that was broken, plus the lender's necessary expenses.
In practice, that means you will want a clear, written figure from the lender showing what is needed. The lender's expenses can be added to the arrears, so the total may be higher than the missed payments alone. A broken term is not always about money. It could involve something like keeping insurance in place or keeping property taxes current, depending on what your mortgage says.
- Ask the lender in writing for the exact amount needed to bring the mortgage up to date.
- Ask whether any other broken terms must be fixed, and how.
- Pay in a way that gives you proof of the date and amount.
- Keep copies of everything you send and receive.
Because timing matters, it is worth asking a lawyer to help you confirm the figure and make sure payment is made properly before the sale closes.
Who gets the money if the home is sold
If the property is sold under power of sale, section 27 of the Mortgages Act sets the order in which the proceeds are paid.
- First, the expenses of the sale.
- Second, interest and costs.
- Third, the principal owing.
- Fourth, later encumbrancers, such as second mortgages and other charges, in their order of priority.
Any surplus left after those payments is paid to the borrower. Whether there is a surplus depends on the sale price compared with everything owed, including other charges registered against the property.
What to do next
- Gather your mortgage, any notices, and your payment history.
- Compare the dates on any notice with the minimum periods above, and check your mortgage for longer ones.
- Contact the lender to ask for the amount needed to cure the default.
- Find out whether the lender is using power of sale or going to court.
- List any other mortgages or charges on your property.
- Speak with a lawyer early, well before a sale date approaches.
Every mortgage and every default is different. A lawyer can review your documents, explain which timelines apply to you and help you decide on next steps.
Frequently asked questions
How long must a default last before a lender can give power of sale notice?
The default must have continued for at least 15 days before the lender may give notice of power of sale. Your mortgage may set a longer period, so check it.
How soon after notice can the home be sold?
The sale cannot take place until at least 35 days after notice is given. That is a minimum, and the mortgage document may provide for longer periods.
Can I stop the sale by catching up on payments?
A borrower in default may get relief before the sale by paying the arrears, or performing the broken covenant, plus the lender's necessary expenses. Ask the lender for the exact figure in writing.
Do I get anything if the home sells for more than I owe?
Proceeds go first to sale expenses, then interest and costs, then principal, then later encumbrancers in priority order, and any surplus is paid to the borrower.
Sources
- Mortgages Act (e-Laws) — Ontario e-Laws
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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