What the Mortgages Act gives a borrower who has fallen behind: the notice periods, the right to catch up, the statement you can demand, and what happens to the money.
⚖️ This is general information, not legal advice. It can't account for your specific situation. Use it to get oriented, then confirm the details with a licensed Ontario lawyer.
Falling behind on a mortgage is frightening partly because the process is opaque. It should not be. Ontario's Mortgages Act sets minimum waiting periods the lender must respect, gives you a right to pay the arrears and stop the sale, obliges the lender to tell you in writing what you owe, and dictates where the money goes if a sale happens. This guide sets out those rights section by section, in order, with what to do at each point. It is general information about Ontario law, not advice on your situation; the notice you have received and your mortgage terms decide the details.
Default, and what the lender can and cannot do first
A missed payment, a lapsed insurance policy or unpaid property taxes are defaults under nearly every set of standard charge terms, and most terms let the lender treat the whole balance as due once a default has occurred. Interest continues at the contract rate. Section 8 of the Interest Act prevents the lender from charging a higher rate, or a fine, on the arrears than on the rest of the principal.
What the lender cannot do is sell the day after. Power of sale has a statutory clock, and demand letters, however alarming, do not start it.
The clock: section 32
Under section 32 of the Mortgages Act, a Notice of Sale cannot be given until the default has continued for at least fifteen days, and no sale may take place for at least thirty-five days after the notice is given. Your mortgage can give you longer periods; section 37 says the Act never shortens them. Section 34 deems a notice sent by registered mail to have been given on the day it was mailed, so the thirty-five days run from the postmark, not from when you opened it.
Section 31 lists who must be served: everyone shown on the parcel register and every registered interest. Section 33 sets out how service is made. A notice that is short on time or missed someone is defective, and section 42 stops the lender from taking further steps until the notice period has run unless a judge permits it.
Your right to catch up: section 22
Section 22 is the borrower's section. Despite any agreement to the contrary, at any time before a sale you may pay the arrears of principal and interest and any expenses the lender has necessarily incurred, and you are then relieved from the consequences of the default. You do not have to pay the whole accelerated balance. The mortgage simply continues.
Section 22(2) lets you require, by written notice, a statement of the arrears, the nature of any other default, and the lender's expenses. Section 22(3) gives the lender fifteen days to answer, and if it does not, or answers incompletely, its enforcement rights are suspended until it complies. Use it: it fixes the figure you must pay and it slows a lender that is not organised.
If the lender has already sued, section 23 provides a similar right on paying what is due plus the costs of the action, and the court dismisses or stays the proceeding.
Payment under the notice: section 43
Where the notice demands payment, section 43 obliges the lender to accept payment made as the notice requires. If you dispute the lender's costs, section 43(2) lets an assessment officer fix them, and section 43(3) says paying the undisputed amount within the notice period, and the assessed costs within ten days of the assessment, complies with the notice.
If it sells: section 27
If nothing is paid and the property is sold, section 27 dictates where the money goes, in order: the expenses of the sale; the interest and costs due under the mortgage; the principal; later mortgages in order of priority; tenants' rent deposits; and the remainder to you. Ask for the accounting. A surplus is yours; a shortfall is a debt the lender can sue you and any guarantor for, within the two-year period under the Limitations Act. If the mortgage was insured, the insurer that paid the lender may pursue the shortfall.
Foreclosure, where the lender takes the property itself through the court, is uncommon in Ontario and has no surplus or shortfall.
Tenants: Part V
If the property is rented, Part V of the Mortgages Act protects the tenants. Section 47 makes a lender in possession, or a buyer under power of sale, the landlord. Section 48 prevents anyone enforcing a mortgage from obtaining possession from a tenant except under the Residential Tenancies Act, 2006. Section 49 releases a tenant who pays the lender after notice from paying you. Tenants' deposits are protected by section 27.
What to do, in order
- Call the lender before it calls you and ask what arrangements it offers. Get any agreement in writing.
- Send a written demand under section 22(2) for the statement of arrears and expenses.
- Check every date on any Notice of Sale against sections 32 and 34.
- Decide how to cure: pay the arrears and costs, sell yourself, refinance, or take insolvency advice. Each has a deadline the sale sets.
- If the mortgage is insured, ask what the insurer offers; the National Housing Act allows CMHC to make arrangements to avoid a default.
- Get legal advice early. Reading the notice and asserting section 22 is a short piece of work that changes the conversation.
How Treadstone Law can help
The lender has a process. So do you. Fifteen days, thirty-five days, the statement you can demand, and the arrears you can pay: those are yours under the Act, whatever the letters say.
Treadstone Law handles real estate matters on a transparent flat fee, with online intake and a real lawyer on your file, across Ontario.
- Start your file online at treadstonelaw.ca/start-file
- See flat-fee pricing at treadstonelaw.ca/pricing
- Learn more about our real estate services at treadstonelaw.ca/real-estate
- Or call us: 1-844-900-1070
This is not legal advice
This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws and government programs change, and how the law applies depends on your specific facts. For advice about your situation, speak with a licensed Ontario lawyer. Treadstone Law is licensed by the Law Society of Ontario — reach us at 1-844-900-1070 or start a file online.