Power of SaleNotice of SaleRedemptionMortgages ActSurplus
A defect in service can invalidate a sale. Title should be searched immediately before notice is given.
The Short Answer
What is power of sale?
A lender's right to sell mortgaged property on default, exercised under the mortgage terms and Part III of the Mortgages Act. It proceeds largely outside court, which makes it faster and cheaper than foreclosure. The lender must serve a Notice of Sale on the borrower and every party with a registered interest, allow the redemption period to run, sell with reasonable care to obtain market value, and distribute the proceeds in priority.
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THE MECHANICS
Notice, Redemption and Sale
The lender must wait a prescribed period after default before issuing the Notice of Sale. The notice must be in the required form and must be served on everyone with a registered interest, not only the borrower.
The borrower then has a redemption period in which to pay the arrears and reinstate the mortgage, or to pay out in full. If they do, the process stops.
If the default is not cured, the lender may sell. The sale should be conducted like any other market sale: a proper listing, real exposure, and an arm's-length transaction.
Proceeds are applied to the mortgage, enforcement costs, and subsequent encumbrances in priority order. Any surplus belongs to the borrower and must be accounted for.
FOR LENDERS
Where Files Go Wrong
Service on the wrong parties. Everyone with a registered interest must be served. A title search on the day of service, not from the file, is what catches a newly registered lien.
Premature notice. Issuing before the waiting period has run.
Defective notice. Wrong figures, wrong form, or an arrears calculation that cannot be supported.
Sale below value. A rushed or connected sale is the classic basis for a borrower's claim.
Failure to account for surplus. The money is the borrower's and must be dealt with properly.
FOR BORROWERS
What Can Be Done After a Notice
A Notice of Sale is not the end. Within the redemption period the mortgage can be reinstated by paying the arrears and costs, or paid out in full through a refinance or sale.
Selling privately, before the lender sells, frequently produces a better price and preserves equity. It requires the lender's cooperation on timing, which is often available where the payout is credible.
Where the notice is defective, or where the lender is proceeding improperly, there may be grounds to challenge. That is a narrower argument than most borrowers hope, and it is not a substitute for a plan to pay.
The single worst option is doing nothing. The redemption period runs whether or not it is used.
DISTRIBUTION
Who Gets Paid and in What Order
Proceeds are applied in order of priority: the enforcing lender's principal, interest and reasonable enforcement costs, then subsequent registered encumbrances in their order of priority, then any surplus to the borrower.
Where the amounts are disputed or the priorities unclear, the proper course is often to pay the funds into court and let the competing claimants sort it out, rather than for the lender to adjudicate priority itself.
General information
This page is general information about Ontario and Canadian law published by Lexaltico LLP. It is not legal advice, it does not account for the facts of any particular situation, and reading it does not create a solicitor-client relationship. Rules change, and whether any option is available to you depends on your own circumstances.
How long after default can a Notice of Sale be issued?
A prescribed waiting period applies under the Mortgages Act. Issuing early risks invalidating the process, so the date should be calculated rather than estimated.
Can the borrower reinstate the mortgage?
Yes, by paying the arrears and permitted costs within the redemption period. The mortgage then continues as before.
What happens to a surplus?
It belongs to the borrower, subject to subsequent encumbrances. The lender must account for it.
Do tenants have to leave?
Not automatically. Residential tenancies generally survive a sale and vacant possession requires the proper process.
Is power of sale available on every mortgage?
It depends on the mortgage terms and the statutory requirements. Standard charge terms in Ontario generally provide for it.
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Immigration consulting services are provided by Regulated Canadian Immigration Consultants (RCICs) in good standing with the College of Immigration and Citizenship Consultants (CICC) under the College of Immigration and Citizenship Consultants Act, S.C. 2019, c. 29, s. 292.
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Where we refer a matter to another firm, including through LexKonnect, we comply with Rule 3.6-6.1 of the Law Society of Ontario’s Rules of Professional Conduct. Any referral fee is set out in the Law Society’s standard referral agreement, signed by you before the referral proceeds, and no fee is payable to us unless and until the receiving firm has been paid for its work. You are never obliged to accept a referral and are free to retain any firm you choose. No referral arrangement affects the independent professional judgment of any lawyer at this firm.
Limitation Periods
Failure to commence proceedings within applicable limitation periods may permanently bar your claim. In Ontario, the general limitation period is two (2) years from discovery under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. Seek legal advice promptly.
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How Lexaltico LLP handles personal information, under PIPEDA and Ontario law.
What we collect
What you give us
When you use a form on this site, email us or telephone us, we collect what you choose to send:
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Purpose
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Your rights under PIPEDA
Under the Personal Information Protection and Electronic Documents Act,
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Short, and written to be read rather than scrolled past.
The four things that matter most
Nothing on this site is legal advice, however specific it looks.
Using the site or sending a form does not make us your lawyers.
Do not send confidential information before a retainer is signed.
Past results depend on their own facts and do not predict yours.
What this site is
Information, not advice
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The difference is practical rather than technical. A page explaining that spousal support is
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A conflict check must be completed. We act for a great many people and
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Why you should not send us documents yet
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What they do and do not tell you
Case results described anywhere on this site are real and are described accurately, and they are
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Calculators on this site produce estimates from the figures you enter. They apply published
formulas and they cannot know about the facts that most often change the answer.
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Limitation of liability
To the fullest extent the law permits, Lexaltico LLP is not liable for any loss arising from your
use of, or reliance on, anything published on this website.
Governing law
These terms are governed by the law of Ontario and the federal law of Canada that applies in
Ontario. Lawyers and licensed professionals at the firm are regulated by the Law Society of
Ontario, and marketing on this site is intended to comply with the
Rules of Professional Conduct.
Every limit on what this website tells you, and every thing it does not do, in one
place rather than in small print at the bottom of each page.
Before you rely on anything here
Four limits, and they matter in this order.
Not legal advice
Everything published on this website is general information. It is not legal
advice, it does not take account of the facts of any particular situation, and reading it does not
create a solicitor client relationship. Do not act, or decide not to act, on anything here without
speaking to a lawyer licensed in your jurisdiction about your own circumstances.
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These pages describe the law of Ontario, and of Alberta only
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Each page states the law as at the review date shown on it. Legislation is amended and case law
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Generality
These pages describe how a rule usually works. That is not the same as how it applies to your
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cannot tell you whether you are inside a rule or inside its exception.
If you contact us
If you are in danger
If you or a child are in immediate danger, call 911.
This website is not an emergency service. Enquiries sent through a form here are read during
business hours and a reply may take up to one business day.
Using this website, submitting a form, sending an email or speaking to us on the telephone does
not make us your lawyers. That relationship arises only when the firm has
confirmed in writing that it has agreed to act, a conflict search has been completed, and a
retainer has been signed.
Confidentiality of enquiries
Do not send confidential or sensitive information through this website or by email until we have
confirmed in writing that we can act for you. Information sent before that point is
not treated as confidential and may prevent us from acting for you, or for
someone else, in a connected matter.
Response times
We aim to reply within one business day. Contacting us does not guarantee a reply within any
particular period, does not oblige the firm to act, and does not stop, extend or satisfy
any limitation period, filing date or court deadline.
Our telephone line
Our line is answered 24 hours a day, every day of the year. Outside office hours calls are taken
by our intake service, who record your details and pass them to the firm. A lawyer responds during
the next business day, or sooner if the matter is urgent. Answering the telephone is not the same
as giving legal advice, and no relationship arises from that call.
Who we are and how we are regulated
Law Society of Ontario
Lexaltico LLP is regulated by the Law Society of Ontario under the
Law Society Act, R.S.O. 1990, c. L.8. All lawyers practising in
Ontario through the firm are members in good standing.
Law Society of Alberta
Alberta matters are handled by lawyers licensed with, and in good standing with, the
Law Society of Alberta. A lawyer licensed in Ontario is not thereby licensed in
Alberta, and the reverse is also true.
Immigration regulation
Immigration consulting is provided by Regulated Canadian Immigration Consultants
in good standing with the College of Immigration and Citizenship Consultants under the
College of Immigration and Citizenship Consultants Act, S.C. 2019, c. 29,
s. 292.
Lawyers, paralegals and consultants
Not everyone at the firm is a lawyer.
Licensed paralegals in Ontario may act only within the scope the Law Society
permits, which does not include most family, estate or criminal matters.
Immigration consultants are regulated by the College, not by a law society,
and are not lawyers.
Law clerks and managers support files but do not give legal advice.
Each page and biography states which applies. Ask at the outset who will handle your matter and
under which licence.
Languages
We serve clients in thirteen languages. Every page of this website is written and published in
English. Where anything is provided in another language, the English
version governs in the event of a difference. If you need an interpreter, tell us when
you book and we will arrange one.
Fees
The initial assessment
The complimentary 15 minute initial assessment is a brief introductory
conversation. It does not include a review of your documents and does not constitute
legal advice.
The firm charges a fee for substantive consultations, including in civil litigation,
criminal defence and immigration matters. The firm may waive that fee at its discretion.
Any fee is disclosed in advance and credited in full toward your account if you retain the
firm.
Referral fees
Where we refer a matter to another firm, including through LexKonnect, we comply with Rule 3.6-6.1 of the Law Society of Ontario’s Rules of Professional Conduct. Any referral fee is set out in the Law Society’s standard referral agreement, signed by you before the referral proceeds, and no fee is payable to us unless and until the receiving firm has been paid for its work. You are never obliged to accept a referral and are free to retain any firm you choose. No referral arrangement affects the independent professional judgment of any lawyer at this firm.
What is published on this site
Calculators and estimators
They produce estimates from what you type and cannot know the rest. They do not
account for the terms of your contract, statutory exceptions, or the discretion a court will
apply. Do not make a decision on a number produced by a calculator.
Past results
Any outcome described happened on its own facts, before its own decision maker,
under the law as it stood at the time. Past results do not predict or guarantee the result of any
other case.
Reviews and testimonials
Reviews shown here are written by third parties and published on platforms we do not control. Each
describes one person’s experience of one matter. They are not a promise, a
prediction or a guarantee about any other matter.
Links to other websites
This site links to regulators, courts, government sources, professional associations and social
platforms, all operated by others. We do not control them, we are not responsible for
their content or accuracy, and a link is not an endorsement.
Other notices
Limitation periods
Failure to start a proceeding within the applicable limitation period may permanently bar
your claim. In Ontario the general period is two years from discovery
under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
Shorter periods apply to many claims. Seek advice promptly. Nothing on this website extends a
limitation period.
Accessibility
We aim to meet the Accessibility for Ontarians with Disabilities Act
and WCAG 2.1 Level AA. If any part of this site prevents you from reaching us, telephone
+1 416 333 6200 or write to
hello@lexaltico.com and we will provide the information
in another format, at no charge.
