Emily Southey<\/a> | 9 minute read<\/p>\n[\/et_pb_text][et_pb_post_title title=”off” author=”off” date_format=”M j” categories=”off” comments=”off” featured_image=”off” _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_post_title][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” width_tablet=”” width_phone=”100%” width_last_edited=”on|phone” max_width_tablet=”” max_width_phone=”100%” max_width_last_edited=”on|phone” custom_padding=”21px||||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9mZWF0dXJlZF9pbWFnZSIsInNldHRpbmdzIjp7fX0=@” align=”center” force_fullwidth=”on” _builder_version=”4.18.0″ _dynamic_attributes=”src” _module_preset=”default” custom_padding=”2px|||||” border_radii=”on|32px|32px|32px|32px” border_radii_tablet=”on|32px|32px|32px|32px” border_radii_phone=”on|0px|0px|0px|0px” border_radii_last_edited=”on|phone” global_colors_info=”{}”][\/et_pb_image][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||11px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n
In Ontario, when a borrower defaults on their mortgage payments for a specific period, mortgage lenders have two legal avenues available to them: power of sale or foreclosure. Both are types of forced sales but there are key differences between the two. Below we delve into the power of sale process in Ontario, as well as how foreclosure and power of sale differ.<\/p>\n
–<\/span><\/p>\nPower of Sale Process<\/h2>\n
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The borrower defaults on mortgage payments<\/b><\/h3>\n
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The power of sale process begins when a borrower defaults on their mortgage payments, effectively breaking the terms of their mortgage agreement. Typically, the borrower must default on more than one mortgage payment for the process to be initiated. Other defaults beyond not making your monthly mortgage payments can lead to a power of sale. These include covenant defaults such as using the property for an illegal purpose, failing to insure the property, intentionally damaging the property, or failing to pay real estate taxes. Mortgage lenders are legally required to provide written notice to a borrower when a covenant default occurs to allow them to remedy the problem. However, it\u2019s important to note that mortgage lenders are not obligated to provide written notice to a borrower who has defaulted on their mortgage payments.<\/p>\n
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“The power of sale process begins when a borrower defaults on their mortgage payments, effectively breaking the terms of their mortgage agreement.”<\/h2>\n
[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||24px||false|false” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on” da_disable_devices=”off|off|off”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”23px||38px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n
The mortgage lender delivers a notice of sale<\/strong><\/h3>\nThe next step in the power of sale process involves the mortgage lender delivering what is known as a Notice of Sale to the borrower. The lender must wait a minimum of 15 days after the default occurs to deliver a Notice of Sale Under Mortgage. Two other notices, detailed in the Bankruptcy Act and the Farm Debt Mediation Act, respectively, must also be issued. These two warning notices are typically delivered before the Notice of Sale Under Mortgage is delivered. The rules and regulations surrounding the Notice of Sale are outlined in the Mortgages Act. For example, included in the Mortgages Act is the provision that the notice must be sent by prepaid registered mail to every party listed as a mortgagor and guarantor in the mortgage agreement, as well as to all parties that have a vested interest in the mortgaged property. These other parties may include execution creditors, subsequent mortgagees, and any person with liens registered against the property. Once the Notice of Sale Under Mortgage has been sent, the mortgage lender must wait a minimum of 35 days (or 40 days if the property is owned by a married couple) until they can move on to the next step.<\/p>\n
–<\/span><\/p>\nThe borrower succeeds or fails to pay off the mortgage debt<\/b><\/h3>\n
The third step in the power of sale process is known as the redemption period. It is the period when the borrower has one last chance to remedy the situation. This either means bringing their mortgage into good standing or paying off their entire mortgage debt, along with any applicable legal fees incurred by the mortgage lender during this process. The redemption period takes place after the borrower has received the Notice of Sale Under Mortgage, and it usually goes one of two ways. Either the borrower pays what they owe and the process is halted, or the borrower fails to make payment, and the mortgage lender issues a Statement of Claim for the debt owed and applies to take possession of the property.\u00a0<\/p>\n
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