Sandeep Pawar
Broker
Home / Sell / Facing power of sale
Facing power of sale? Know your options and your timeline
Missed payments, a renewal at a much higher rate, a private second mortgage coming due: it can happen to anyone. If you have received a Notice of Sale, act quickly but calmly. Selling on your own terms can protect more of your equity.
The short answer: under Ontario’s Mortgages Act, a lender cannot give a notice of sale until a default has lasted 15 days. It then cannot sell for at least 35 days after the notice. During that time you can bring the mortgage back into good standing, refinance, or sell on your own terms. Call a real estate lawyer the day the notice arrives.
The legal timeline in Ontario
These are the minimum periods in the Mortgages Act when a mortgage gives the lender a power of sale. Your mortgage may set its own terms, and the real process often takes longer.
| Stage | The rule | Mortgages Act |
|---|---|---|
| Default | A missed payment or a broken term of the mortgage. | |
| Earliest notice of sale | Not until the default has continued for at least 15 days. | Section 32 |
| Who is served | The owner and others with a registered interest that ranks after the lender’s, including later mortgage lenders, execution creditors and some lien holders. | Section 31 |
| How it is served | Personal service or registered mail. A mailed notice counts as given on the day it is mailed. | Sections 33 and 34 |
| Notice period | No sale for at least 35 days after the notice is given. The lender generally cannot take other enforcement steps in that period without a court order. | Sections 32 and 42 |
| Your right to cure | Before the sale, you can pay the amount in default plus the lender’s necessary expenses and be relieved of the default. | Section 22 |
| Sale and proceeds | Costs, interest, principal and later claims are paid in order. Any balance goes to you. | Section 27 |
Hypothetical example: a payment is missed on day 1. The earliest a notice could be given is after 15 days of default, and the earliest sale is 35 days after that notice. Every day counts, so start the day you learn of the default.
Your options
| Option | How it works | Fits when |
|---|---|---|
| Bring the mortgage into good standing | Pay the arrears and the lender’s necessary expenses before the sale. | The problem was temporary and you can afford the payments going forward. |
| Refinance | A new lender pays out the current mortgage. | You have enough equity and income to qualify. A mortgage professional can review this. |
| Sell on your own terms | You list and sell, and the mortgage is paid out on closing. | Keeping the home is not realistic, and you want to protect your equity. |
| Negotiate time with the lender | Ask, in writing, for time to close a sale or catch up. | You have a firm plan the lender can see, such as a signed sale. |
What to do this week
Call a real estate lawyer
The notice is a legal document with deadlines. Your lawyer reads it first.
What happens
Your lawyer checks the notice, the dates, the amounts claimed and whether the lender followed the rules.
What you do
Send your lawyer the notice, your mortgage documents and every letter from the lender.
Documents and people
Notice of Sale, mortgage commitment and charge terms, payment history.
Watch for
Ignoring mail or delaying. The notice period runs whether you respond or not.
How I help
I can refer you to real estate lawyers I work with. You are always free to choose your own.
Find out exactly what is owed
You cannot plan without the real numbers: arrears, fees, the full balance and any penalty.
What happens
Your lawyer asks the lender for a written statement of the default and its expenses. The Act gives the lender 15 days to answer.
What you do
List every debt secured on the home, including second mortgages and lines of credit.
Documents and people
Lender statements, any second mortgage documents, property tax account.
Watch for
Lender legal fees and interest that grow every week.
How I help
I fold these figures into a net-proceeds estimate, so you can see what a sale would leave you.
Get a realistic value
Your options depend on your equity. You need a real number quickly.
What happens
I prepare a written comparative market analysis as a priority.
What you do
Start with the instant estimate, then let me see the home.
Documents and people
Your survey, upgrade receipts and any tenancy documents.
Watch for
An optimistic online estimate that hides how little equity is left.
How I help
I tell you honestly whether a sale will cover the debts, and how fast homes like yours are selling. See pricing and market analysis.
Decide, and move quickly
If selling is the right option, a well-priced, well-presented listing is your best protection.
What happens
We list at a price that will sell within the time available, and your lawyer keeps the lender informed.
What you do
Keep the home show-ready. Respond to offers quickly.
Documents and people
Listing agreement, agreement of purchase and sale, lender’s payout statement.
Watch for
Overpricing and losing weeks you do not have.
How I help
I negotiate firm offers that can close in time, and work alongside your lawyer. See comparing offers.
Find out what your equity really is, confidentially.
What’s my home worth?Your sale compared with the lender’s
| You sell | The lender sells | |
|---|---|---|
| Price and presentation | You choose the price strategy and prepare the home. | The lender’s priority is recovering what it is owed. The home may be sold as is. |
| Costs | Normal selling costs. | Sale and enforcement costs are paid from the proceeds first. |
| Timing | Your plan, if the lender agrees to the timing. | The lender’s timetable. |
| Privacy | A normal listing that looks like any other. | The lender controls the listing and how it is described. |
Where the money goes on a power of sale
Sale expenses
All expenses of the sale, and of any earlier attempted sale.
Interest and costs
Interest and costs then due on the mortgage being enforced.
Principal
The principal owing on that mortgage.
Later claims
Later mortgages and other registered claims, in order of priority.
Tenant rent deposits
Repayment of rent deposits owed to tenants, where applicable.
You
Any balance left is paid to the owner.
If the sale does not cover everything owed, ask your lawyer whether you could still owe the difference.
Documents to gather today
- The Notice of Sale and the envelope it came in
- Your mortgage documents, and any second mortgage or line of credit
- Recent statements and your payment history
- Property tax and utility accounts
- Leases, if the home has tenants (see selling a tenanted home)
- Your income documents, if refinancing is an option
Mistakes I see
- Waiting for the notice period to pass before getting help.
- Listing too high, hoping to recover everything, and running out of time.
- Making verbal promises to the lender instead of written ones through a lawyer.
- Forgetting a second mortgage or line of credit in the numbers.
Buyers looking at these homes can read buying power of sale homes. More for sellers in seller mistakes to avoid.
Questions about power of sale
How long does a power of sale take in Ontario?
Under section 32 of Ontario’s Mortgages Act, a lender cannot give a notice of sale until the default has lasted at least 15 days. It then cannot sell for at least 35 days after the notice is given. In practice the whole process often takes longer, but you should act as soon as you receive a notice.
Can I sell my house after receiving a Notice of Sale?
Often, yes. You can list and sell during the notice period and pay out the mortgage on closing. That keeps you in control of price and presentation. Your sale must close before the lender sells, unless the lender agrees to wait, so speak with a real estate lawyer immediately.
Can I stop the power of sale by paying the arrears?
Section 22 of the Mortgages Act lets a borrower pay the amount in default, plus the lender’s necessary expenses, at any time before the sale. That relieves the default. You can ask the lender in writing for a statement of what is owed. Your lawyer should handle this.
What happens to the money if the lender sells my home?
Under section 27 of the Mortgages Act, the proceeds pay the costs of the sale first, then interest and costs, then the principal. Later mortgages and other claims are paid next, in order. Anything left is paid to you.
Will the lender sell my home for less than it is worth?
A lender’s priority is recovering what it is owed, and the costs of the sale and enforcement are paid from the proceeds first. Those costs build up the longer enforcement runs. Selling on your own terms gives you more control over price and presentation.
Is my conversation with you confidential?
Yes. I treat every financial situation confidentially. We can meet at a RE/MAX Gold office by appointment or talk by phone, in English, Hindi, Punjabi, Urdu, Kannada or Telugu.
Should I talk to my lender?
Yes, early and in writing, ideally with your lawyer’s help. Ask whether the lender will consider a payment plan, extra time to close a sale, or other options. Keep a record of every conversation.
Sources
- Ontario e-Laws: Mortgages Act (sections 22, 27, 31, 32, 33, 34 and 42)
- Financial Consumer Agency of Canada: mortgage prepayment penalties
Know your number, then your options
Get a confidential estimate, then I will work with your lawyer on a plan that protects as much of your equity as possible.