If you’ve fallen behind on your mortgage payments, you may have already received notices from your lender warning of Power of Sale proceedings. For many Ontario homeowners, this process can feel overwhelming and confusing. The good news is that even if your lender has started a Power of Sale, you still have options — but time is critical.
In this article, we’ll explain what Power of Sale is, how it works in Ontario, and what steps you can take to protect yourself and your home.
What Is Power of Sale?
In Ontario, most mortgages include a Power of Sale clause. This clause allows the lender (the bank or mortgage company) to sell the property if the borrower defaults on the mortgage. Unlike a foreclosure, which requires court involvement, Power of Sale is a faster, non-court process.
That means your lender doesn’t need a judge’s approval to sell your home. Instead, once you default on your mortgage, the lender can move quickly through a legal process that leads to the sale of your property.
If you’re in this situation, speaking with an Ontario real estate lawyer early can help you understand your rights and preserve your equity.
The Power of Sale Process in Ontario
Here’s a step-by-step overview of how the process works:
- Default and Demand Letter
- Once you miss payments, your lender will send you a demand letter outlining what you owe (arrears, interest, and legal costs).
- Notice of Sale
- After 15 days of default, the lender can issue a Notice of Sale under the Mortgages Act.
- This notice gives you a redemption period of about 35–40 days to bring the mortgage back into good standing.
- Redemption Period
- During this time, you have the right to pay the arrears, plus costs, to stop the proceedings.
- Power of Sale Listing
- If you do not pay, the lender has the right to list your home for sale through a real estate agent.
- They must try to get fair market value, but you lose control over the process.
Your Options as a Homeowner
If you’re facing Power of Sale in Ontario, here are the main options available to you:
- Bring Your Mortgage Current: Pay the missed payments, interest, and lender’s costs.
- Redeem the Mortgage: Pay off the full balance of the mortgage.
- Negotiate with the Lender: Some lenders may agree to a repayment plan or an extension.
- Refinance: Arrange a new mortgage (sometimes through a private lender) to pay off the existing one.
- Sell the Property Yourself: Often the smartest choice if you can’t catch up. Selling the home on your own terms usually leads to a higher price than a lender-controlled sale.
If your financial difficulties are related to separation or divorce, you may also want to review our Family Law services, as real estate and family matters often overlap.
Risks of Power of Sale
There are serious consequences if the process is not managed quickly:
- Deficiency Judgment: If the sale price does not cover the mortgage and costs, the lender can sue you for the shortfall.
- Legal and Realtor Fees: All lender costs are added to your debt.
- Credit Damage: Default and Power of Sale proceedings can significantly affect your credit rating for years to come.
Proper planning — including estate planning — can also help protect your home and other assets from unnecessary risks in the future.
Why Acting Quickly Matters
The key to minimizing losses during a Power of Sale is acting early. The more time passes, the more interest, legal costs, and fees build up. Homeowners who act quickly — whether by reinstating their mortgage, refinancing, or selling the home themselves — usually protect more of their equity and limit damage to their financial future.
If you own investment or corporate property, our corporate and commercial law services can also help you navigate financing issues tied to your business.
How We Can Help
At Filice Law Professional Corporation, we regularly assist clients who are facing Power of Sale in Ontario. We can:
- Review your lender’s notices and calculate exactly what’s owed.
- Explain your legal rights and options.
- Help you negotiate with your lender or explore refinancing.
- Work with you to sell your home and preserve your equity.
Final Thoughts
A Power of Sale is stressful, but it doesn’t have to mean losing everything. With the right advice and quick action, you can take control of the situation and protect your financial future.
📞 Contact us today for a consultation if you’ve received a Notice of Sale or are concerned about mortgage default. The sooner you act, the more options you’ll have.
Frequently Asked Questions About Power of Sale in Ontario
1. How long does a Power of Sale take in Ontario?
The timeline can move quickly. Once you are in default for 15 days, the lender can issue a Notice of Sale. You then have about 35–40 days (the redemption period) to pay the arrears. If you don’t, the lender can list your property for sale. From start to finish, the process can take just a few months.
2. Can I stop a Power of Sale?
Yes. You can stop the process at any time before the sale by paying the arrears and legal costs (bringing the mortgage current). If you can pay off the full mortgage balance, you can also redeem the mortgage entirely.
3. What happens if the sale price doesn’t cover the mortgage?
If the property sells for less than what you owe, you may be responsible for the deficiency — the difference between the sale proceeds and your total mortgage debt, plus costs.
4. Does Power of Sale affect my credit?
Yes. Being in default and going through Power of Sale proceedings will negatively impact your credit score and make it more difficult to obtain financing in the future.
5. What is the difference between Power of Sale and Foreclosure?
In Ontario, lenders almost always use Power of Sale because it is faster and less costly than foreclosure. In foreclosure, the lender takes ownership of the property through the courts. In Power of Sale, the lender sells the property but does not take ownership.
