- Under a power of sale clause, the lender cannot give notice until the default has lasted at least 15 days and cannot sell until at least 35 days after notice.
- You can stop the lender enforcing the acceleration clause by paying the arrears and the lender's necessary expenses.
- Once the sale closes, your remedy is limited to a claim for damages against the lender.
If you have missed mortgage payments, you may have heard the words power of sale. It is a way for a lender to sell your home to recover what it is owed, without having to take the matter through a full court foreclosure process.
This article explains in plain terms what power of sale means in Ontario, the timelines, who must be told, and what rights you keep. Every situation is different, so use it as a starting point.
What power of sale means
Most mortgages contain a power of sale clause. It allows the lender (the mortgagee) to sell the property if you default, and the process is governed by Part III of the Mortgages Act. The lender sells the home and uses the money to cover what you owe, which is different from foreclosure, where the lender asks the court to end your rights in the property.
If a mortgage has no power of sale clause, the statutory power of sale under Part II of the Mortgages Act applies only after three months' default and requires 45 days' notice to persons having an interest in the property.
The timeline
Where a mortgage contains a power of sale, 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. The 35-day notice of sale must go to every person having an interest in the mortgaged property.
| Step | Rule |
|---|---|
| Default continues | At least 15 days before the lender can give notice |
| Notice of sale given | To every person with an interest in the property |
| Earliest sale | At least 35 days after notice is given |
| No power of sale clause | Three months' default and 45 days' notice |
Once a notice of sale 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.
Rights you keep while in default
Despite any agreement to the contrary, a borrower in default can stop the lender from enforcing the acceleration clause by paying the amount due under the mortgage and the lender's necessary expenses. That means the arrears, not money that is only due later.
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.
A spouse who has no ownership interest in the matrimonial home but has a right of possession has the same right of redemption or relief against forfeiture as the owner-spouse and is entitled to the same notice of the lender's claim and its enforcement. If the home is rented out, a lender that becomes mortgagee in possession, or gets title by power of sale, is deemed to be the landlord under an existing tenancy.
The sale and what comes after
A lender selling under power of sale must take reasonable precautions to obtain the true market value of the property as of the date of sale; a hasty or secretive sale can cast doubt on whether a proper price was obtained. This duty matters if the lender later claims a shortfall from you.
Timing is critical. Once the power of sale closes, the right to stop enforcement under section 22 no longer applies, and the borrower is limited to a claim for damages against the lender. Where a notice was given in professed compliance with the Mortgages Act, the purchaser's title cannot be attacked because of a defect in the sale process, and anyone harmed has a remedy against the lender who sold. That protection does not extend to a purchaser who had actual notice of the defects.
If the sale leaves a shortfall, a lender's claim on the mortgage covenant to repay must be started within the later of 10 years after the cause of action arose and 10 years after the liable person's interest in the land was conveyed or transferred. A lender does not lose that longer period just because the property has been sold.
What to do next
- Do not ignore letters from the lender or its lawyer; note every date.
- Ask the lender in writing for a statement of arrears and expenses.
- Work out whether you can pay the arrears and expenses to reinstate the mortgage.
- Talk to your lender about relief options before the process advances.
- Speak to a lawyer promptly, since your options narrow once the sale closes.
Frequently asked questions
How long does power of sale take in Ontario?
The statute sets minimums rather than a total length. Notice cannot be given until the default has continued for at least 15 days, and the sale cannot happen until at least 35 days after notice. How long the whole process takes beyond that depends on the facts.
Can I stop a power of sale?
Often yes, before the sale closes. You can stop the lender enforcing the acceleration clause by paying the arrears and the lender's necessary expenses. Once the sale closes, you are limited to a damages claim against the lender.
Is power of sale the same as foreclosure?
No. Power of sale is the lender selling the property under the mortgage and the Mortgages Act. Foreclosure goes through the courts, which have broad jurisdiction to set aside a default foreclosure judgment, though doing so is exceptional relief.
Can I still owe money after my home is sold?
Possibly. A claim on the covenant to repay, such as for a shortfall, can be started within the later of 10 years after the cause of action arose and 10 years after the liable person's interest in the land was conveyed or transferred. Whether a shortfall can be recovered depends on the mortgage and the facts, so get legal advice.
Sources
- Ontario.ca – Power of sale assignments (policy) — ontario.ca
- CanLII – Mortgages Act, R.S.O. 1990, c. M.40 — canlii.org
- Court of Appeal for Ontario – 2544176 Ontario Inc. v. 2394762 Ontario Inc., 2022 ONCA 529 — ontariocourts.ca
- Court of Appeal for Ontario – Sheth v. Randhawa, 2022 ONCA 89 — ontariocourts.ca
- CanLII – Family Law Act, R.S.O. 1990, c. F.3 — canlii.org
- Court of Appeal for Ontario – Toronto-Dominion Bank v. Hosein, 2016 ONCA 628 — ontariocourts.ca
- Court of Appeal for Ontario – Hilson v. 1336365 Alberta Ltd., 2019 ONCA 1000 — ontariocourts.ca
- Court of Appeal for Ontario – 1250140 Ontario Inc. v. Bader, 2022 ONCA 197 — ontariocourts.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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