For most Ontario homeowners, a mortgage is a long-term promise: regular monthly payments in exchange for the right to live in the home and eventually own it outright. When those payments stop, the lender has legal tools to recover what it is owed, and the most common one in Ontario is the power of sale. A power of sale is the lender's right under the Mortgages Act to sell the property after a mortgage default, without having to go to court for a foreclosure order. Because the process moves quickly, it is important for any homeowner who receives a notice of sale to understand how it works and what choices are available while there is still time to act, and many people in this situation choose to discuss their position with Real Estate Lawyers in Oakville before the redemption period expires.

How a Power of Sale Starts

A power of sale usually begins after a homeowner misses one or more mortgage payments. The lender will first send a demand letter asking the borrower to bring the mortgage up to date, and if the arrears are not paid, the lender serves a formal notice of sale under the Mortgages Act. The notice states the amount owed and gives the homeowner a redemption period of about 35 days to deal with the default. During that period the property is not yet sold, but the deadline is strict: once it passes without the default being cured, the lender can take steps to list and sell the home.

What a Homeowner Can Do During the Notice Period

The notice period is the homeowner's best window to save the property. In most cases, the borrower can reinstate the mortgage by paying the missed payments together with the lender's costs up to that point, which puts the mortgage back in good standing and stops the sale. Alternatively, the homeowner can redeem the mortgage entirely by paying the full outstanding balance, including interest and costs, which discharges the mortgage. Selling the property privately before the lender sells it is another option, since a private sale may achieve a better price and leave the homeowner in control of the timing.

The Lender's Duties When Selling

Although a power of sale lets the lender sell without a court order, the lender does not get a free hand. The lender must act in good faith, take reasonable steps to obtain a fair market price, and treat the property as though it were its own asset to protect. In practice, that means obtaining appraisals to establish the property's value, listing the home with a real estate agent, marketing it properly, and considering offers carefully rather than accepting the first low bid.

What Happens to the Sale Money

After the sale closes, the proceeds are applied in a set order. First, the costs of the sale and the power of sale proceedings are paid, followed by the amount owed under the mortgage, including principal, interest, and lawful costs. Any remaining debts secured against the property, such as a second mortgage or a lien, are paid next. If money is left over after all of those amounts are settled, the surplus belongs to the borrower. If the sale price does not cover the total debt, however, the shortfall does not simply disappear: the lender can sue the borrower personally for the deficiency, which can mean a court judgment and further collection steps after the home is already gone.

Costs That Get Added to the Debt

One of the hardest parts of a power of sale is how quickly the amount owed grows. Legal fees for the demand letter, notice of sale, and sale documents are added, along with appraisal fees, property management and maintenance costs, insurance, and the real estate commission on the sale. These amounts can add thousands of dollars to the debt, which is why curing a default early is almost always cheaper than letting the process run its course.

Power of Sale, Foreclosure, and Judicial Sale

People often confuse a power of sale with foreclosure, but they are different remedies. In a foreclosure, the lender asks the court to transfer ownership of the property to the lender, which ends the borrower's rights in the home and generally means the lender cannot also sue for any shortfall. A power of sale, by contrast, lets the lender sell the home without court involvement and preserves the right to pursue any deficiency. A judicial sale is a third route, in which the court supervises the sale of the property; it is less common in Ontario. For homeowners, the practical difference is speed and control: a power of sale is the fastest of the three and gives the borrower the least time to react.

Practical Steps If a Notice Arrives

If a notice of sale arrives, the first step is not to ignore it. Read it carefully, note the deadline, and check the amounts the lender says are owed, including interest and costs. Contact the lender early to ask about bringing the mortgage current or agreeing to a payment arrangement, since lenders are often more flexible before the process advances. Get legal advice quickly, because the deadlines are strict and some options are lost once they pass. With prompt action, many homeowners are able to reinstate or redeem their mortgage, sell the property on their own terms, or negotiate a workable way forward.

Estofa Law is a Burlington based law firm serving Oakville, Milton, Burlington and the Greater Toronto Area with real estate purchases and sales, refinancing and title transfers, and it regularly assists homeowners and buyers with mortgage and property matters across the region.

Estofa Law, 107 – 5500 N Service Rd, Burlington, ON L7L 6W6, Canada; +1 (289) 678-1744; info@estofa.ca

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