If you have received a notice about a power of sale on your property, you are probably feeling stressed and unsure of what comes next. You are not alone, and you may have more options than you think. Power of sale is one of the most common ways a lender enforces a mortgage in Ontario when payments fall behind, but the process follows specific rules and timelines — and those timelines can matter a great deal.
This article explains, in plain language, how power of sale generally works in Ontario, what the steps usually look like, and why getting early advice can make a meaningful difference. It is written to help you understand the landscape so you can make informed decisions. It is not legal advice, and every situation depends on its own facts.
If you are dealing with mortgage arrears or a notice of sale, time limits may apply, and early legal advice may help preserve important rights.
Why This Matters
A power of sale can move faster than many homeowners expect. Once a lender starts the process, there are defined periods during which you may be able to bring the mortgage back into good standing or take other steps. Missing a window, or misunderstanding what a document means, can narrow your options.
Understanding the process matters because:
- Your home or investment property may be at risk.
- There are specific steps a lender must follow under Ontario law.
- You may have the ability to “redeem” the mortgage by paying what is owed, depending on your circumstances.
- Other parties — such as second mortgage holders or guarantors — may also be affected.
- Acting early generally gives you more room to negotiate or respond.
Common Situations
People contact a lawyer about power of sale in a range of circumstances, including:
- A homeowner who fell behind on mortgage payments after a job loss, illness, or separation.
- A property owner who received a document titled “Notice of Sale Under Mortgage” and does not know what it means.
- A borrower with a private or high-interest mortgage who is facing aggressive enforcement.
- A person who believes the amount the lender claims is owed is wrong.
- A guarantor who is being told they are responsible for someone else’s mortgage debt.
- An owner who wants to sell the property themselves before the lender does.
Each of these situations can play out differently, and the right approach depends on the facts.
Overview
In Ontario, a lender’s power of sale rights generally come from the mortgage document itself and from the Mortgages Act, R.S.O. 1990, c. M.40. Power of sale allows a lender (the mortgagee) to sell the property to recover the debt after a borrower (the mortgagor) defaults, without first obtaining a court order in many cases although court proceedings can still be involved.
A few general points that are commonly part of the process:
- Default and notice. After a default, a lender will typically serve a Notice of Sale under the Mortgages Act on the borrower and on others with a registered interest in the property. Section 42 of the Mortgages Act sets out a period during which the lender generally cannot take further enforcement steps. Under the Act, a notice of sale generally cannot lead to sale-related steps until at least 35 days have passed (a longer period can apply in certain circumstances). The exact period and requirements depend on the mortgage and the facts.
- Right to redeem. During the applicable period, a borrower may be able to “redeem” the mortgage — broadly, by paying the arrears (and costs) or the full amount owing, depending on the situation and the terms of the mortgage.
- Sale of the property. If the default is not resolved, the lender may proceed to sell the property. A lender exercising power of sale has duties when conducting the sale, including obligations connected to obtaining a proper price.
- Surplus or shortfall. After a sale, sale proceeds are applied to the mortgage debt and costs. If money is left over, it may be payable to others with an interest in the property. If the sale does not cover the debt, the borrower (or a guarantor) may still face a claim for the shortfall.
Power of sale is different from foreclosure, which is a separate court-based remedy with different consequences. The right remedy and the right response depend on the specific facts, the mortgage terms, and current law.
Because the requirements and timelines can vary, the applicable law depends on the facts of each case. You may wish to obtain legal advice at HKS Law before responding to any notice.
Potential Risks
Misunderstanding a power of sale can have serious consequences. Some of the risks people face include:
- Losing the property if no steps are taken within the available time.
- Owing a shortfall if the property sells for less than the mortgage debt plus costs.
- Mounting costs, because legal and enforcement costs are often added to the amount you must pay to bring the mortgage current.
- Effects on guarantors and co-owners, who may be drawn into the matter.
- Acting on incorrect assumptions about how much time you have or what a document requires.
These risks are general examples. Whether and how they apply to you depends on your circumstances, which is why early advice can be valuable.
Frequently Asked Questions
It is a process that allows a mortgage lender to sell a property to recover a debt after the borrower defaults. The lender’s rights generally come from the mortgage and from the Mortgages Act. The details depend on your situation.
They are different legal remedies. Power of sale generally involves the lender selling the property to recover what is owed, while foreclosure is a court-based process that can transfer ownership of the property to the lender. The consequences differ, and which one applies depends on the facts.
The Mortgages Act sets out a period before sale-related steps can be taken, generally at least 35 days, though a different period can apply depending on the circumstances. Because timelines are fact-specific, you should confirm the dates that apply to your situation as soon as possible.
In some situations, a borrower may be able to resolve the default — for example, by paying the arrears and costs, refinancing, or selling the property — within the available time. Whether this is possible depends on your circumstances. An Ontario lawyer can review your options.
Redeeming generally refers to bringing the mortgage back into good standing or paying it off, depending on the terms and the stage of the process. The amount required can include arrears, interest, and costs.
If the sale proceeds do not cover the mortgage debt and costs, you (or a guarantor) may face a claim for the shortfall. The outcome depends on the facts and the documents involved.
After the debt and proper costs are paid, any surplus may be distributed to others with a registered interest in the property and potentially to the owner, depending on the circumstances.
You may be able to dispute the amount, but you should act quickly and obtain advice. Disagreements about the amount owing are fact-specific and may require review of the mortgage and account records.
Power of sale can be used with many types of mortgages, including private mortgages, depending on their terms. Private mortgage enforcement can move quickly, so early advice is often important.
You are not required to have a lawyer, but power of sale involves strict documents and timelines, and the consequences can be significant. A lawyer can help you understand your options and protect your interests
Why Choose HKS Law
HKS Law helps property owners, borrowers, and lenders across Ontario understand and respond to mortgage enforcement and power of sale matters. Our team focuses on clear communication, practical guidance, and protecting your interests at every step. We understand that these situations are stressful, and we aim to give you a calm, straightforward explanation of where you stand and what choices you may have.
Call Now!
If you have received a notice of sale or are worried about falling behind on your mortgage, do not wait. Time limits may apply, and early legal advice may help preserve important rights. Every situation is different.
Contact HKS Law today to schedule a consultation: 📞 Phone: 519-489-0303 ✉️ Email: sales.hkslaw@gmail.com
Legal Disclaimer The content of this article is provided for informational purposes only and does not constitute legal advice or create a lawyer-client relationship. While every effort has been made to ensure the accuracy of the information provided, laws and regulations are subject to change, and the application of these laws may vary depending on the specific facts and circumstances of your situation. Readers are encouraged to seek professional legal counsel for advice tailored to their individual circumstances. HKS Law assumes no responsibility or liability for any errors, omissions, or reliance on the information provided herein. For personalized legal assistance, please contact our office directly.
If you require legal advice regarding your specific circumstances, please contact HKS Law to schedule a consultation with a lawyer. Do not wait, call now!
