A private lender moved to sell a triplex before its owner could catch up

The situation

The letter from Hagop's lawyer arrived on a Tuesday, and Kaveh did not open it until Thursday. He already knew roughly what it would say. He had missed four months of payments on the $60,000 second mortgage he had taken out against his triplex two years earlier, a private loan from Hagop that had once seemed like the fastest way to cover a stretch of vacant units and a costly repair. What the letter actually said was that Hagop intended to enforce his security and sell the property to recover what he was owed.

Kaveh drove for a rideshare service and had for eleven years, supplementing it with the rental income from two of the triplex's three units — he and his wife Siran, an early childhood educator, lived in the third. The building, worth somewhere in the neighbourhood of $350,000, had been the foundation of their plan for retirement, bought a decade earlier when prices were far lower and carried carefully ever since. A bad stretch of vacancies, combined with an unexpected roof repair, had pushed them behind on the private mortgage, a loan they had taken because a conventional lender would not extend them more credit against a property that already carried a first mortgage of roughly $180,000.

Kaveh had tried to handle the default himself for nearly two months before the letter arrived. He had called Hagop directly, offered a partial payment plan, and believed, based on that conversation, that he had more time than he actually did. He had not realized that a private lender's right to enforce a security default does not pause simply because informal conversations are ongoing, and he had not put anything from those conversations in writing — no confirmation of what he had offered, no record of what Hagop had seemed to accept, nothing that could later be pointed to if their understanding of the conversation turned out to differ.

By the time he called our office, Hagop had already served formal notice and was preparing to move forward with a sale under the power his mortgage gave him. Kaveh had no idea, at that point, that there was more than one way for a property in default to be sold — or that the difference between those two paths would matter enormously to how much of his roughly $110,000 in equity he would keep, and how much say he would have in keeping it.

The legal problem

A mortgage in default in Ontario can generally be enforced two ways. The more common route, a power of sale, lets the lender sell the property directly once the notice period and other requirements are met, without going through a full court proceeding first. It is faster and cheaper for the lender, and it is the path most private lenders prefer for exactly that reason. The other route, a judicial sale, puts the sale under the court's supervision from the start — a judge oversees the listing, reviews the price obtained, and approves how the proceeds are distributed before anything is finalized.

The practical difference for a homeowner is significant. A power of sale requires the lender to get a price that is reasonable, but the standard for challenging a completed power of sale after the fact is a demanding one, and a homeowner who was not actively watching the process closely can find it sold before they fully understand what happened. A judicial sale builds oversight in from the beginning: the borrower has a formal chance to be heard, the court reviews the process rather than the lender alone controlling it, and any surplus after the debt and costs are paid is distributed under the court's supervision rather than left to be sorted out afterward.

Kaveh's mortgage documents gave Hagop the right to proceed by power of sale, and Hagop's lawyer had already begun down that path. Shifting to a judicial sale is not automatic — a borrower has to actively raise it, and a court has to be persuaded there is a reason the supervised process is appropriate, rather than simply leaving the lender's faster route to run its course.

Two months of missed payments had also grown into four by the time we were retained, because Kaveh's informal conversations with Hagop had not stopped interest and costs from accumulating. The debt itself was not in serious dispute — Kaveh acknowledged he owed the arrears. The real fight was over which process would govern the sale, because that process would determine whether Kaveh kept meaningful control over the outcome or simply watched it happen.

What we did

1. Reviewed the mortgage documents and Hagop's formal default notice within a day of being retained, to establish precisely which stage of the enforcement process had actually been reached. Kaveh's own understanding, built from informal phone calls rather than anything in writing, did not match what the notice period actually required, and the gap between the two accounts could easily have cost him whatever time remained. Pinning down the real deadline told us exactly how many days were left to act and shaped every decision that followed.
2. Calculated the true arrears owed, adding the interest that had accrued and the costs Hagop had already incurred pursuing the default, rather than relying on the rough figure Kaveh had been carrying in his head. His own estimate had understated the real number by a meaningful margin, largely because the two months of informal calls had not stopped interest from compounding in the background. An accurate figure mattered because any negotiation with Hagop would only be credible if it started from numbers both sides could actually verify.
3. Filed to bring the matter before the court and asked that any sale proceed as a judicial sale rather than under Hagop's private power of sale, arguing that the property's three units, the tenants living in two of them, and the size of Kaveh's equity relative to the debt all justified court oversight. Filing preserved Kaveh's right to be heard before a private sale could be finalized without him, and it immediately changed the leverage in the file by putting Hagop's faster route on hold.
4. Argued the request on the basis of proportion, showing the court that the arrears Hagop was owed were a small fraction of the roughly $110,000 in equity at stake, and that a rushed private sale carried a real risk of leaving value on the table that a supervised process would protect. Framing the argument around proportion, rather than simply disputing that a default had occurred, gave the court a concrete reason to take the request seriously and gave Hagop's own counsel something to weigh before pushing ahead.
5. Negotiated directly with Hagop's counsel while the court application was still pending, since a judicial sale does not prevent a settlement from being reached before any sale actually happens. Most lenders, including private ones, would rather avoid the cost and delay of a court-supervised process if a workable alternative exists, and Hagop was no exception. That shared incentive gave us real room to talk, and it meant the court filing was doing useful work even before a judge ever had to rule on it.
6. Reached a repayment structure that covered the full arrears over a defined period, built around Kaveh committing the rental income from the two tenanted units directly toward the debt rather than trying to find a lump sum he did not have. Tying repayment to an income source Kaveh already controlled, instead of a one-time payment, made the plan realistic rather than aspirational, and it let him keep the property outright instead of losing it or being forced into a sale on someone else's timeline.
7. Documented the arrangement formally, setting out clear payment terms and specific consequences if payments were missed again, so both sides knew exactly what would happen next rather than relying on the kind of informal understanding that had already caused confusion once. Putting the agreement in writing removed the ambiguity that had let Kaveh's first two months of phone calls with Hagop drift past the actual notice deadline, and it gave Hagop the certainty he needed to accept a slower repayment timeline instead of pursuing a sale.
8. Advised Kaveh on managing the property through the repayment period, including setting up a dedicated account to hold the tenants' rent so the portion committed to Hagop could not be quietly absorbed into other household or building expenses. This was a direct response to how the original default had happened in the first place, since money that should have covered the mortgage had gotten spent elsewhere under pressure, and it gave Kaveh a practical safeguard against falling into the same pattern twice.

The outcome

The property was not sold. The court application for a judicial sale gave Kaveh enough leverage and enough time to reach a structured repayment agreement with Hagop instead, one built around the rental income from the two tenanted units rather than a lump sum Kaveh did not have. That was the win the judicial sale process created — not through a court ultimately ordering a sale, but through the credible threat of one changing the terms of the conversation.

It was a genuine compromise, not a clean escape. Kaveh still owed the full arrears, plus the interest and costs that had built up over the months he had tried to manage the default alone, and he committed a meaningful share of the building's rental income to repayment for an extended period, which meant less breathing room in the household budget for some time to come. Hagop, for his part, gave up the faster, lower-cost route to recovering his money and accepted a longer timeline in exchange for the certainty of a documented, enforceable plan rather than a contested court process with an uncertain outcome and delay of its own.

Siran's income from her work as an early childhood educator, steady if modest, became part of what made the repayment plan credible to Hagop's counsel — it was one more sign that the household could sustain the commitment rather than fall behind a second time. That detail, small as it was, mattered in the negotiation: a repayment plan is only as good as the other side's confidence that it will actually be honoured.

Kaveh kept the triplex, kept his and Siran's home within it, and kept the tenants who had been with him for years, avoiding the disruption a forced sale would have caused them as well. He also kept, going forward, a much clearer sense of what a formal default notice actually means — and how much of a difference it makes to raise the right process, in writing, before a lender's preferred path is already well underway rather than after it has nearly run its course.

What you can learn from this