Power of Sale of a Home in Ontario: Your Rights as Owner

Opening a notice of sale under mortgage is frightening. It usually means you have missed payments and your lender has started the process of selling your home to recover what it is owed. The notice does start a clock, but it also gives you rights and time to act.

This article explains, in general terms, how power of sale works in Ontario, the minimum timeline, what you can do to stop a sale, and what happens to the money if the home is sold. Your mortgage document and your own facts matter, so treat this as a map and not a substitute for advice.

What power of sale means

Power of sale is a way for a mortgage lender to sell the property when the borrower is in default, so the lender can be repaid from the sale. It is governed in Ontario by the Mortgages Act.

It is not the only route. A lender may also choose to enforce its mortgage through a court action instead, and which route is used depends on the lender and the mortgage. If you receive court papers rather than a notice of sale, the steps and your options can differ, so get advice promptly.

The minimum timeline

The Mortgages Act sets floors for how quickly a lender can move. These are minimums, not guaranteed periods, and your mortgage document may set longer ones.

• The 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.
• Your mortgage may set longer periods than these statutory minimums, so read the mortgage terms and the notice carefully.

Check the dates on the notice as soon as you get it. Counting the days correctly can matter, and a lawyer can confirm whether the lender has followed the required steps.

How an owner can stop the sale

Under the Mortgages Act, a borrower in default may get relief before the sale by paying the amount in arrears, or by performing the covenant that was broken, plus the lender's necessary expenses. In plain terms, you may be able to bring the mortgage back into good standing instead of paying off the whole loan.

Because the lender's expenses are added, the figure will be higher than the missed payments alone. Ask the lender, in writing, for the exact amount needed and a date it is calculated to, then confirm the figure with your lawyer before you pay.

• Contact the lender and ask for a written statement of the arrears and the lender's expenses to date.
• Ask whether any payment arrangement is possible, and get any agreement in writing.
• Consider whether a refinance, a private loan or help from family could cover the arrears.
• If you cannot catch up, ask whether selling the home yourself is a better route than waiting for a lender-run sale.

Where the sale money goes

If the home is sold under power of sale, the proceeds are paid out in a set order. They go first to the expenses of the sale, then to interest and costs, then to principal, and then to later encumbrancers in priority order. Any surplus is paid to the borrower.

A later encumbrancer is someone with a lower-ranking claim on the property, such as a second mortgage lender. If you have a second mortgage or other debts registered against the home, mention them when you get advice, because they affect both the process and what is left over.

What to do next

Act quickly, because the timeline moves forward whether or not you respond. Do not ignore mail from the lender or its lawyer.

• Gather your mortgage, any renewal or amending documents, and every notice you have received.
• Note the date of each notice and the date of your first missed payment.
• Make a list of all other debts and registered claims against the property.
• Speak with a lawyer early about your options, including whether the lender has followed the correct steps.

Frequently asked questions