• The power of sale process allows lenders to sell a property without going through the court system.
• If a borrower defaults on their mortgage payments, the lender can initiate the power of sale process to recover the outstanding debt.
• Borrowers have the right to redeem their mortgage up until the time of the sale, so seeking legal advice early on can be beneficial.

The power of sale process in Ontario is a legal procedure that allows lenders to sell a property without going through the court system. The process is governed by the Mortgages Act and the Real Estate and Business Brokers Act. If a borrower defaults on their mortgage payments, the lender can initiate the power of sale process to recover the outstanding debt.

Notice of Sale

The process typically begins with the lender sending a Notice of Sale to the borrower, which outlines the details of the sale and gives the borrower a chance to pay off the mortgage arrears and any other outstanding costs. The notice must also be registered on the property's title and sent to any other parties with an interest in the property, such as other mortgage lenders or lien holders.

Waiting Period

After the Notice of Sale has been sent, there is typically a waiting period of at least 35 days before the lender can proceed with the sale of the property. During this time, the borrower has the right to redeem their mortgage by paying off the outstanding debt and costs.

Sale of the Property

If the borrower is unable to redeem their mortgage during the waiting period, the lender can then sell the property through a real estate agent or by public auction. The proceeds from the sale are used to pay off the outstanding debt, including the mortgage arrears, interest, and any other costs associated with the power of sale process. The lender must provide a statement of account to the borrower outlining the costs incurred during the power of sale process.

Surplus Funds and Deficiency Judgment

If the sale of the property generates more money than is required to pay off the outstanding debt and costs, the surplus funds are returned to the borrower. However, if there are other parties with an interest in the property, such as other mortgage lenders or lien holders, they may be entitled to a share of the surplus funds.

On the other hand, if the sale of the property through power of sale does not generate enough money to cover the outstanding debt and costs, the lender may be able to pursue the borrower for the remaining balance. This is known as a deficiency judgment. However, in Ontario, the lender must obtain a court order to pursue a deficiency judgment. The court will then determine if the borrower is liable for the deficiency and the amount of the deficiency owed.