Enforcement & Power of Sale Matters

When a borrower defaults on a mortgage in Ontario, the lender has several remedies available under the Mortgages Act (Ontario). The most commonly used remedy is power of sale — a process by which the lender sells the mortgaged property to recover the outstanding loan amount. Power of sale is a significant legal process with strict procedural requirements, and both lenders and borrowers need experienced legal counsel to navigate it effectively. At Goldstone Law Professional Corporation, we act for private lenders in power of sale and mortgage enforcement proceedings, and we also represent borrowers who are facing enforcement action and wish to understand their options.

The Power of Sale Process in Ontario

Notice of Sale

The power of sale process begins with the lender issuing a Notice of Sale Under Mortgage to the mortgagor (borrower) and any subsequent encumbrancers. The Notice of Sale must comply with the requirements of the Mortgages Act, including specifying the amount required to remedy the default, and must provide the borrower with a statutory redemption period — generally 35 days — during which the borrower may pay the arrears and reinstate the mortgage.

Redemption Period

During the redemption period, the borrower has the right to pay the arrears and reinstate the mortgage, avoiding the power of sale. If the borrower redeems, the enforcement process ends and the mortgage continues in force. If the borrower does not redeem within the redemption period, the lender may proceed with the sale of the property.

Conducting the Sale

Once the redemption period has expired, the lender may list the property for sale and proceed to close the sale. The lender’s obligation is to obtain the best possible price reasonably obtainable in the circumstances — not necessarily the full market value, but a price that reflects genuine market exposure and reasonable marketing efforts. Failure to meet this standard of care can expose the lender to liability to the borrower.

Distribution of Proceeds

The proceeds of a power of sale are distributed in a specific order of priority: first, the costs of the sale; then the amount owing to the enforcing lender; then amounts owing to subsequent encumbrancers in order of their priority; and any surplus is paid to the borrower. If the sale proceeds are insufficient to satisfy all claims, the lender may have a claim against the borrower for any deficiency.

For Borrowers Facing Power of Sale

If you have received a Notice of Sale and are concerned about losing your property, it is important to seek legal advice immediately. There may be options available to you, including negotiating a repayment arrangement with the lender, refinancing the mortgage with another lender, selling the property before the power of sale is completed, or challenging the validity of the enforcement proceedings if proper notice requirements were not met. The 35-day redemption period passes quickly. Do not delay in seeking legal advice.

Frequently Asked Questions — Power of Sale Matters

How long does a power of sale take in Ontario?

The power of sale process in Ontario typically takes a minimum of 45 to 60 days from the issuance of the Notice of Sale to the completion of the sale, assuming no complications. Complex situations — including title issues, competing claims, or contested proceedings — can extend the timeline significantly.

Can a borrower stop a power of sale after the redemption period?

Once the redemption period has expired, the borrower’s options are more limited, but not necessarily exhausted. A borrower may be able to redeem the mortgage by paying the full amount owing (principal, interest, and costs) up until the point of the lender closing the sale. A borrower may also bring a court application to challenge the power of sale proceedings if proper procedures were not followed.

Contact Goldstone Law immediately if you are initiating or facing a power of sale proceeding. Time is critical — our lawyers are ready to advise you on your rights and options.