Power of Sale in Ontario: Notice Timelines and How to Stop It

Falling behind on your mortgage is stressful, and a letter that mentions a power of sale can feel like the clock has already run out. In Ontario, the Mortgages Act sets minimum time periods and service rules that a lender must follow before it can sell your home.

This article explains those timelines, who must receive the notice, and the main ways a homeowner can try to stop a sale. It is general information, not advice on your situation. If you have a notice in hand, a lawyer can check the dates and the paperwork against your mortgage.

The basic power of sale timeline

Most mortgages contain a power of sale clause, which lets the lender sell the property if you default. The Mortgages Act limits how fast that can happen. The lender cannot give a notice of exercising a power of sale until the default has continued for at least 15 days, and the sale cannot be made until at least 35 days after the notice is given.

Default usually means not following the terms of the mortgage, such as missing a regular payment. If it continues, the lender can seek repayment, which may eventually lead to a forced sale of the home.

The longer timeline for mortgages without a power of sale clause

A different set of rules applies if the mortgage has no power of sale clause of its own. The statutory power to sell then arises only after three months of default. No sale may be made until 45 days' written notice has been given, and that notice may be given at any time after 15 days of default.

This statutory power does not apply to a mortgage that has its own power of sale, and none of that Part applies to a mortgage that declares it does not apply. Which timeline governs you depends on the wording of your mortgage, so check it carefully.

Who must get the notice and how it must be given

The lender may not exercise a power of sale unless the notice has been given to the listed persons. These include persons shown on the parcel register and index of executions, the Crown or a public authority claiming a statutory lien if the lender has written notice of it, and anyone who gave the lender written notice of an interest before the notice of sale.

The notice must be given by personal service or by registered mail, addressed to the person's usual or last known address or an address set out in the mortgage. A notice sent by registered mail must be mailed in Ontario and is deemed given on the day it is mailed.

Once the lender has given a demand or notice of sale, it generally may not start any further proceeding to enforce the mortgage during the time set in the notice without an order from a judge of the Superior Court of Justice. The judge may make that order without notice or on whatever notice the judge directs. This bar does not apply to proceedings to stop waste or other injury to the mortgaged property.

Ways to stop a power of sale

• Catch up before the sale. Even if the whole debt has been accelerated, you can be relieved of the default by paying the arrears plus the lender's necessary expenses, or by performing the broken covenant. This can be done at any time before a sale or before an enforcement action is started, despite any agreement to the contrary.
• Ask for numbers in writing. You may give the lender written notice requiring a written statement of the arrears or the nature of the default, and of the expenses the lender has necessarily incurred.
• If a court action has started, you may pay $100 into court as security for costs and then perform the covenant or pay the money due. The court must then dismiss the action if judgment has not yet been recovered, or may stay it at later stages.
• Ask a court for help. A court may grant relief against penalties and forfeitures on terms it considers just, and the Superior Court of Justice may grant an injunction or appoint a receiver.

How a judge would apply that last option depends on your facts, so it is worth speaking to a lawyer quickly.

Interest, costs and defective notices

• Interest on arrears: no fine, penalty or rate of interest may be charged on mortgage arrears that would make the charge on the arrears higher than the rate payable on principal not in arrears.
• Lender's costs: any interested person may have the lender's costs assessed by an assessment officer without a court order. The costs of the assessment are in the assessment officer's discretion.
• Defective notice: where a notice was given in professed compliance with Part III of the Mortgages Act, the purchaser's title cannot be impeached on the ground that Part III was not complied with. A person harmed by the non-compliance keeps a remedy, such as damages, against the person who exercised the power of sale.

What to do next

• Find your notice and note the date it was mailed or served, since registered mail counts from the day it is mailed.
• Read your mortgage to see whether it has a power of sale clause, because that decides which timeline applies.
• Contact your lender as soon as you can; borrowers in difficulty are told to do so.
• Request a written statement of arrears and expenses.
• Ask about relief measures. Banks may offer options such as waiving fees or extending the amortization, and where a bank agrees in writing to a measure that permits a missed payment, it is expected not to report that payment to credit bureaus.
• Speak to a lawyer promptly about your options, including court relief.

Note that these bank relief measures are expected of federally regulated institutions such as banks. They do not apply to private lenders or Ontario credit unions, so what your lender offers may differ.

Frequently asked questions