Power of Sale vs. Foreclosure: Ontario Uses a Different Process
Unlike many U.S. states, Ontario mortgage default is most commonly resolved through power of sale rather than judicial foreclosure. Power of sale allows a mortgagee (lender) to sell the property to recover the outstanding debt without going through a full court foreclosure process, provided specific notice requirements under Ontario’s Mortgages Act are followed first.
The Notice Period
Before a lender can proceed with power of sale, Ontario law requires a Notice of Sale be given to the homeowner, typically providing a minimum statutory redemption period (commonly 35 days from proper notice, though this can vary) during which the homeowner can pay the arrears and reinstate the mortgage. This window is critical — it’s often the last real opportunity to avoid the sale entirely.
What Happens If the Home Sells Under Power of Sale
The lender has a legal duty to obtain a reasonable price for the property, but the homeowner does not receive the same control over pricing, timing, or marketing that they would in a conventional sale. If the sale price exceeds the outstanding mortgage debt and associated costs, any surplus is returned to the homeowner — but if it falls short, the homeowner may remain liable for the shortfall depending on the mortgage terms.
Options Before It Reaches This Stage
- Contact your lender early. Many are willing to discuss revised payment arrangements before initiating power of sale proceedings.
- Consider a private sale first. If you act during the notice period, selling the home yourself with a real estate professional’s help can often achieve a better outcome than an eventual power of sale.
- Speak with a licensed insolvency trustee or lawyer. Especially where other debts are also involved, understanding your full financial picture before deciding how to proceed matters.
Homeowners across York Region facing this situation benefit most from acting during the notice period rather than after — a private, well-marketed sale in the current market almost always outperforms the outcome of a completed power of sale.
Thinking about your next move in Richmond Hill, Markham, or York Region? Contact Ray Azar for a confidential, no-obligation consultation and a current market analysis tailored to your property.