Foreclosure Vs Power of Sale in Canada

Foreclosure Vs Power Of Sale in Canada

Whether you’re looking to buy a power of sale home in Canada or just curious about foreclosures, there are some important things to consider before you sign on the dotted line.

A power of sale is the first forced sale process a mortgage lender can use when the borrower has defaulted on their mortgage. It usually begins with a notice of sale followed by a Writ of Possession.


When a homeowner is behind on their mortgage payments, the lender – in some cases a bank or government entity – can take possession of their property and sell it to make back the money they are owed. They have two main courses of action they can use to do this: Power of Sale and Foreclosure.

A Power of Sale is a clause that’s written into a mortgage that allows a lender to sell a home if the borrower defaults on their loan. In Ontario, Canada, it’s the most common forced sale process used when a homeowner falls behind on their mortgage payments.

In this situation, the lender obtains a legal writ of possession to evict occupants and put the house on the market to recover their money. They must sell the property at a fair market value and any profits they make from the sale go towards debt repayments.

This is a faster and more effective method than foreclosure for the lender as they don’t need to pursue litigation to obtain the title, which means they can complete the process more quickly. In addition, they can recoup their fees more quickly than with foreclosure – typically within a few months.

However, even though it is a more efficient process than foreclosure, Power of Sale still comes with some risks. First, it’s important to note that these homes are often sold “as is.” That means any issues with the home that are found during a home inspection will not be fixed by the seller and they become the buyer’s problems.

Second, if you decide to purchase a Power of Sale home, it’s crucial to consult with a real estate lawyer and professional. They can help you understand the process and get a mortgage payment fit to your situation.

When buying a power of sale property, it’s also vital to make your purchase agreement conditional on the result of a home inspection. That way, you can find out the true condition of the home before you sign on the dotted line and ensure you’re getting a good deal on the property.

Time Frame

When a borrower fails to make their mortgage payments on time, the lender may choose to take action against them using one of two debt recovery methods: Power Of Sale or Foreclosure. Both processes involve legal paperwork and can have significant consequences for borrowers.

A mortgage is one of the most expensive things a homeowner can own, so it can be difficult to keep up with repayments when financial challenges arise. This can include sudden medical expenses, automotive repairs or job changes that don’t allow for enough time to pay.

The lender then tries to collect as much money from the property as they can, wiping off any debts and recouping what they paid for it in the process. This can be a lengthy and stressful process for the borrower, but it’s necessary to get them out of trouble.

If the lender doesn’t receive their desired result, they have the option of taking the property back and starting all over again with a new loan. This could be a better deal for both parties, but it can take a lot of work and can be more costly in the long run.

In Canada, each province and territory has their own procedures when it comes to dealing with defaulted mortgages. Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island and Quebec use a power of sale while the other nine provinces and territories follow foreclosure procedures.

Power of sale cases generally take less than six months to complete, whereas foreclosure takes significantly longer and involves more court involvement. The foreclosure process begins when a homeowner is behind on their mortgage payments and the lender has to sue them in court to start the proceedings.

Homeowners should contact their lenders as soon as possible if they are faced with the possibility of a power of sale and explore all possible options. Lenders are usually quite flexible and will often agree to cut deals with a homeowner who is facing this situation so that both parties can achieve their goals: the lender gets their payment and the homeowner keeps their home.


When homeowners cannot keep up with their mortgage payments, they may face foreclosure or power of sale. If this happens in Richmond Hill, Ontario, the GTA or elsewhere in Canada, it is vital to get legal advice on your options from a qualified real-estate lawyer.

Most people who purchase homes in Canada take out a mortgage, and most keep up with their monthly payments. However, some homeowners default on their mortgages and find themselves in a situation where they can no longer make the required payments.

This can be a devastating situation for the homeowner and family. It can be particularly difficult to deal with when the homeowner has children that may be unable to attend school and live at home.

The lender has the legal right to force a power of sale on the property if the borrower does not make their mortgage payments for at least 15 days. Until this time period passes, the lender is not able to move forward with the power of sale process and start the auction procedure.

After the 15-day deadline passes, a notice of sale will be issued. This will outline the reason for the foreclosure, the date of the auction and how much is owed.

During this period, the lender will try to sell the property for as much as possible in order to recoup their losses. They will also take into consideration selling costs, including commissions and legal fees.

If the sale does not cover all of the outstanding balance owing on the mortgage plus the selling costs, they will sue the borrower for the shortfall. This can be a frustrating experience for the borrower, but they will have to make their best efforts to bring their mortgage into good standing.

Another important part of the power of sale process is the right to cancel the sales procedure if the homeowner is able to pay off their mortgage or other debts that have accrued since the original loan was taken out. This can be done by filing a statement of claim at the Small Claims Court or Superior Court of Canada.


Homeowners in Canada can have a variety of options when facing mortgage default. The most common route is a foreclosure; however, in some cases, homeowners may be able to recover their property with the power of sale process.

Many homeowners will miss payments or simply neglect to make them. This can happen for a number of reasons, such as missing vacations or switching jobs. It can also be a result of the homeowner’s financial situation, such as when they are dealing with other unsecured debts.

A borrower in this situation can contact their lender or mortgage specialist to see if they have any loan modification options that could provide some short-term relief. If they do, they should take advantage of those options and try to get their mortgage payments back on track.

Regardless of whether or not the homeowner can recover their mortgage, a power of sale process or foreclosure can be difficult. It is important to seek legal advice if you find yourself in this situation.

In Canada, each province and territory has its own set of rules and laws that govern the mortgage process. In Ontario, for example, lenders must notify the homeowner of a default at least 45 days before they begin the process.

The lender must also give the homeowner a notice of sale before they start selling their property. This is typically a 37-day period, but varies by province.

Once the home is sold, the proceeds are then used to pay off the mortgage balance and any tax arrears. If there are any extra funds left over, it goes to the homeowner as well.

Another important aspect to note about the power of sale process is that it does not require the involvement of a court. This can be a huge benefit for those in Canada who need a quick and easy solution to their mortgage problems.

While the power of sale process is quicker than a foreclosure, it does still take a significant amount of time and is quite complicated. The best thing to do is to get expert legal advice from someone who understands the ins and outs of both methods.

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