Notice of Sale Under Mortgage in Ontario: What to Do When You Get One

Getting a notice of sale under mortgage is stressful, but it is not the end of the road. It is a formal step that starts a clock, and what you do in that time can change the outcome.

This article explains what the notice is, how the 35-day period works, what to check, and the practical steps to take. It is general information, so confirm the details of your situation with a lawyer.

What a notice of sale is

A notice of sale tells you the lender intends to exercise its power of sale. It must be in Form 1, Notice of Sale Under Mortgage, prescribed by O. Reg. 814/21 under the Mortgages Act; the current version has been in effect since Jan. 1, 2022.

The 35-day notice of sale must go to every person having an interest in the mortgaged property. Where a person entitled to the notice is an execution creditor, the notice may be addressed to the lawyer who issued the execution, or to the creditor if there is no lawyer. A spouse with a right of possession of the matrimonial home is entitled to the same notice of the lender's claim and its enforcement as the owner-spouse.

How the 35-day period works

The lender cannot give notice of exercising the power of sale until the default has continued for at least 15 days, and cannot sell until at least 35 days after the notice is given. Once the notice has been given, the lender cannot start any further proceeding or action to enforce the mortgage until the time stated in the notice has passed, unless a Superior Court judge permits it.

The Court of Appeal has held that a lender's possession of the property could not be lawful until after the notice of sale period expired. Separately, the question of notice before possession is a different one: unless the mortgage itself requires notice, a lender does not have to give notice before taking possession once it is otherwise entitled to possession, and that does not change the point that possession could not be lawful until the notice of sale period expired. Read your mortgage and ask a lawyer how these rules fit your case.

If your mortgage has no power of sale clause, different rules apply: the statutory power of sale applies only after three months' default and requires 45 days' notice.

What to check in the notice

• The date it was given, since the sale cannot happen until at least 35 days after that date.
• Who else received it, such as a spouse or other person with an interest.

How the notice was delivered also matters. Service is governed by s. 33(1) of the Mortgages Act, and in one case a notice of sale was found invalid because it was not served personally as that section required in that case. On the other hand, a notice sent in the manner the statute prescribes is not defective just because the intended recipient never actually received it. So do not assume that not receiving a notice cancels it; a lawyer can look at the service.

What you can do during the notice period

Despite any agreement to the contrary, you can stop the lender from enforcing the acceleration clause by paying the amount due under the mortgage, meaning the arrears and not money that is only due later, plus the lender's necessary expenses.

You can also give the lender written notice requiring a written statement of the arrears and expenses. The lender must answer within 15 days, and if it fails to do so without reasonable excuse, or gives an incomplete or incorrect answer, its enforcement rights are suspended until it complies.

If a sale does go ahead, the lender must take reasonable precautions to obtain the true market value of the property as of the date of sale. A writ of possession (Form 60C) may be issued only with leave of the court.

Act before the sale closes. Once it does, the right to pay and stop enforcement no longer applies, and you are limited to a claim for damages against the lender.

What to do next

• Note the date you received the notice and the date it says it was given.
• Keep the envelope, the notice and any proof of how it was delivered.
• Request a written statement of arrears and expenses from the lender.
• Find out whether you can pay the arrears and expenses to stop enforcement.
• Contact your lender about relief options, but do not rely on talks to pause the clock.
• Speak to a real estate lawyer straight away, before the notice period runs out.

Frequently asked questions