Notice of Sale Under Mortgage in Ontario: What It Is and What Happens Next

Falling behind on mortgage payments is stressful enough. Then an envelope arrives — formal, legal-looking, with words like "Notice of Sale Under Mortgage." If you are holding that document right now, understanding what it means could determine whether you keep your property.

A notice of sale under mortgage Ontario is not a court order and it is not an eviction notice. It is a formal trigger under Ontario's Mortgages Act that starts a countdown: the borrower has a set period to pay everything owed and redeem the mortgage, or the lender gains the right to sell the property without going to court. That process is called power of sale, and it moves quickly.

This article explains what the notice must contain, how it must be served, what the redemption period looks like, and — critically — what steps a borrower should take the moment one arrives.

What a Notice of Sale Under Mortgage Actually Is

Ontario's Mortgages Act gives mortgage lenders a remedy called power of sale. Unlike foreclosure (which requires a court to transfer title to the lender), power of sale lets the lender sell the property on the open market and recover the debt from the proceeds — all without a court order, provided strict procedural rules are followed.

The formal Notice of Sale Under Mortgage is the document that kicks this process off. It serves two purposes at once:

1. It puts the borrower on written notice that the lender considers the mortgage in default and intends to exercise power of sale.
2. It starts the redemption period — the window of time during which the borrower can pay everything owed and stop the sale entirely.

A demand letter from a lender or its lawyers is not the same thing. Many borrowers receive a demand letter first — an informal warning to bring payments current. That letter does not start the redemption clock. Only the formal notice, served in the manner the Mortgages Act requires, triggers the statutory period.

What the Notice Must Include

The Mortgages Act sets out specific information that a valid Notice of Sale Under Mortgage must contain. If any of these elements is missing or materially wrong, the notice may be defective — and a defective notice is a potential defence.

A valid Notice of Sale Under Mortgage must include:

• The full legal names of the lender (mortgagee) and borrower (mortgagor)
• A description of the mortgaged property sufficient to identify it (typically the municipal address and legal description)
• The nature and particulars of the default (missed payments, breach of covenant, etc.)
• The total amount claimed — principal outstanding, accrued interest, costs, and any other amounts due under the mortgage
• The redemption deadline — the date by which the borrower must pay in full to stop the power of sale
• A statement of the lender's intention to sell if the default is not remedied

Every item on that list matters. A notice that states the wrong amount claimed, misidentifies the property, or omits the redemption deadline gives the borrower grounds to challenge the process. Do not assume the numbers or the description are correct — verify them.

How the Notice Must Be Served

Proper service is as important as proper content. A notice that is never validly delivered does not start the redemption period, regardless of what it says.

Accepted Methods of Service

Under Ontario law, a Notice of Sale Under Mortgage may be served in several ways:

• Personal service — delivering the notice directly to the borrower in person. This is the most straightforward method and leaves little room for dispute.
• Registered mail or courier — sent to the borrower's last known address. Service is deemed complete a set number of days after mailing, even if the borrower claims they never received it.
• Substituted service — where personal service is not possible, a court may authorize an alternative method, such as posting the notice on the property or serving a family member at the residence.
• Posting on the property — in some circumstances, affixing the notice to a conspicuous part of the property, often combined with another method.

Why Defective Service Is a Real Defence

If the lender cannot prove it served the notice correctly, or if it served the wrong person or the wrong address, the notice is likely invalid. An invalid notice means the redemption period never started — and any steps the lender took after that point, including listing or selling the property, could be challenged. Courts have set aside power of sale transactions where service was not properly effected.

If you received a notice and are uncertain whether it was served on you correctly, that question should be the first thing you raise with a lawyer.

The Redemption Period

As of writing — verify this with a lawyer, as the rules can change — the redemption period under Ontario's Mortgages Act is 35 days after the day the notice is properly served. During that 35-day window, the borrower has the right to redeem the mortgage by paying the full amount claimed, plus any additional interest and costs that accrued since the notice was issued.

"Redeeming" the mortgage means paying everything — not just the arrears. The lender is entitled to demand the entire outstanding balance, accrued interest, legal fees, and enforcement costs as a condition of stopping the sale.

If the borrower redeems within the 35-day period, the power of sale process ends and the lender must accept the payment. The mortgage continues (or is discharged, if the full principal was paid).

If the borrower does not redeem, the lender may proceed to list and sell the property.

Who Else Must Be Notified

The borrower is not the only person who must receive notice. Ontario law requires the lender to also serve the notice on:

• Subsequent encumbrancers — anyone else who holds a registered interest in the property after the mortgage being enforced, such as a second mortgage holder or a judgment creditor with a lien
• Tenants — anyone in possession of the property, since a sale may affect their right to remain
• Guarantors — individuals who signed a personal guarantee for the mortgage debt may also be entitled to notice

Failure to serve a required party can expose the lender to a challenge even after the sale is completed. If you are a second mortgage holder and did not receive notice of a first mortgage power of sale, you may have rights that were not extinguished.

What Happens If the Borrower Ignores the Notice

Ignoring a Notice of Sale Under Mortgage does not make it go away. Once the 35-day redemption period expires:

• The lender may list the property for sale on the open market
• The lender must obtain at least fair market value — they are not permitted to sell at a deep discount that harms the borrower's equity
• Any surplus from the sale (after paying the mortgage, costs, and subsequent encumbrancers) must be paid to the borrower
• If the sale proceeds are insufficient to cover the debt, the lender may pursue the borrower personally for the shortfall

The process moves faster than most borrowers expect. From the expiry of the 35-day period to an accepted offer can take weeks, not months.

Practical Steps for a Borrower Who Receives a Notice

Receiving a Notice of Sale Under Mortgage is serious — but it is not necessarily the end. Here is what to do immediately:

1. Read the entire notice carefully. Note the redemption deadline. Write it on your calendar. Every day inside that window matters.
2. Check the math. Lenders make mistakes. Compare the amount claimed against your mortgage statements and payment records.
3. Check the property description. Confirm the address and legal description match your property.
4. Contact a lawyer the same day if possible. A lawyer can quickly assess whether the notice is valid, whether the amount claimed is accurate, and what your options are. Options may include refinancing, selling voluntarily before the deadline (which gives you more control over the price and any surplus), negotiating with the lender, or challenging a defective notice.
5. Do not ignore calls or letters from the lender's lawyers. Engagement — even just to buy a few days — is almost always better than silence.
6. Explore refinancing early. Lenders are generally willing to cancel the power of sale process if the mortgage is redeemed. A mortgage broker or private lender may be able to help, but these options take time to arrange.

Frequently asked questions