February 28
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The power of sale process is a legal procedure that allows a lender to sell a property without having to go through the court system. In Ontario, the power of sale process is governed by the Mortgages Act and the Real Estate and Business Brokers Act.
When a borrower defaults on their mortgage payments, the lender may initiate the power of sale process to recover the outstanding debt. 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.
If the borrower is unable to pay off the arrears and costs, the lender can then proceed with the sale of the property. Here's a more detailed breakdown of the power of sale process in Ontario:
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.
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.
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.
It's also worth noting that in Ontario, borrowers have the right to redeem their mortgage up until the time of the sale. This means that if the borrower is able to pay off the outstanding debt and costs before the sale takes place, they can reclaim their property and avoid the power of sale process altogether.
In conclusion, the power of sale process in Ontario is a legal procedure that allows lenders to recover outstanding debt by selling a property without going through the court system. If the sale of the property does not generate enough money to cover the outstanding debt and costs, the lender may be able to pursue a deficiency judgment, but must first obtain a court order. If you're facing the power of sale process, it's important to seek legal advice to understand your
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