Can You Sell Your Home While It's in Power of Sale in Ontario?

Falling behind on mortgage payments and receiving notice that your lender is pursuing power of sale is frightening — but it doesn't automatically mean the property is out of your hands. Until a power of sale transaction actually closes, you generally remain the registered owner, and in many cases you retain the ability to sell the property yourself and control the outcome far more than a lender-run sale would.

This article explains how power of sale works in Ontario, what your rights look like while it's underway, and how selling the property yourself can fit into that process.

What Power of Sale Actually Is

Power of sale is the remedy most Ontario mortgages give a lender when a borrower defaults — typically by falling behind on payments. It allows the lender to sell the property to recover what it's owed, without going through a full court foreclosure process. It's the dominant default remedy used on Ontario residential mortgages.

Importantly, power of sale is a lender's right to sell if the default isn't resolved — it isn't an automatic transfer of ownership the moment you miss a payment. Ontario law requires the lender to follow a defined process, including formal notice to the borrower, before a sale can proceed.

You Generally Remain the Owner Until a Sale Closes

A common misconception is that receiving a power of sale notice means the home is no longer yours. In fact, until the lender's sale actually completes and closes, you typically remain the registered owner of the property, with the rights that come with that — including, in many cases, the ability to list and sell the home yourself.

This matters because a sale you control, on your own timeline and to a buyer you choose, is usually a far better outcome than a lender-driven sale, both financially and in terms of what happens to any equity above the mortgage debt.

Redeeming vs. Selling: Two Different Paths Out

There are generally two distinct ways a homeowner can resolve a power of sale situation before the lender completes its own sale:

• Redemption — paying the lender what's owed (the arrears, plus applicable costs and interest) to bring the mortgage back into good standing and stop the power of sale process entirely.
• Selling the property yourself — listing and closing a sale to a third-party buyer, with the proceeds used to pay out the mortgage debt (and any other registered claims) at your closing, ideally leaving remaining equity to you.

Selling doesn't require having the cash on hand the way redemption does — it depends instead on finding a buyer and closing before the lender's own sale process concludes.

Steps If You Want to Sell During a Power of Sale Process

1. Talk to your lender immediately after receiving notice. Lenders generally have an interest in being paid in full and may be willing to allow time for a properly listed sale, especially if it appears likely to recover the full debt.
2. Engage a real estate lawyer right away, not after you've already accepted an offer. A lawyer can confirm exactly where the power of sale process stands, what the lender requires, and how much time is realistically available.
3. List the property promptly with a realtor experienced in distressed sales, and price it to actually sell within your available window rather than testing the market.
4. Keep the lender informed as offers come in. A lender that sees a credible sale in progress is often more cooperative about timing than one that hears nothing.
5. Close before the lender's own sale completes. Once a lender-run sale under the power of sale process closes, your ability to sell the property yourself ends.

Risks and Timing Considerations

Time works against a homeowner in a power of sale situation. The lender is not obligated to wait indefinitely, and every stage of the statutory notice and sale process moves the property closer to a lender-controlled sale. If your own sale isn't progressing — no serious offers, financing falling through, an unrealistic asking price — the lender's process continues regardless.

It's also worth understanding that a power of sale is different from foreclosure: in a power of sale, any proceeds above what's owed to the lender (and other registered claims) are generally still due to you as the former owner, whereas foreclosure historically extinguished the borrower's equity entirely. This is one more reason a well-run sale — yours or the lender's — matters for what you ultimately walk away with.

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