Power of Sale in Ontario: What Homeowners Need to Know
Receiving a power of sale notice is one of the most stressful moments a homeowner can face. The good news: in most cases, it can be stopped — but only if you act quickly. This guide explains exactly how power of sale works in Ontario, what your rights are, and what options exist to protect your home.
⚡ Already received a Notice of Sale? Time is critical. Call Paul Hunjan directly at 416-820-8601 — private mortgage funding can commit in 24–48 hours.
What Is Power of Sale?
Power of sale is the legal process a mortgage lender uses to sell a property when the borrower defaults on their mortgage. Unlike foreclosure (which is rare in Ontario), power of sale does not transfer title to the lender — the lender sells the property on your behalf and you retain any surplus equity after the mortgage balance and costs are paid.
Power of sale is governed by the Mortgages Act, R.S.O. 1990 and is the standard enforcement mechanism used by banks, credit unions, private lenders, and MICs in Ontario.
The Power of Sale Process in Ontario — Step by Step
Step 1: Default (Day 1)
Default typically occurs after one missed mortgage payment. Your mortgage agreement defines what constitutes default — it is usually failure to make a scheduled payment, but can also include failure to pay property taxes, maintain insurance, or meet other covenants.
Step 2: Notice of Sale After Claim (Day 15+)
After 15 days of default, the lender may issue a Notice of Sale After Claim (also called a Notice of Exercise of Power of Sale). This document is served on you personally or by registered mail and triggers the formal process. It sets out the amount required to redeem the mortgage.
Step 3: Redemption Period (35 Days)
After the Notice of Sale is served, you have a 35-day redemption period. During this window, you can stop the power of sale entirely by paying the redemption amount — the mortgage arrears plus the lender's legal costs and any other charges set out in the notice.
This is the most important window. If you can arrange refinancing or private funding during this period, the lender must accept the redemption and the process ends.
Step 4: Listing and Sale
If the 35-day period expires without redemption, the lender can list the property for sale. Your right of redemption does not end at this point — you can still redeem up until the sale transaction closes. However, costs escalate significantly once the property is listed.
Step 5: Sale Closes
Once the sale closes, your right of redemption is extinguished. The lender applies the sale proceeds to the mortgage balance and legal costs. Any surplus is paid to you. If there is a shortfall, the lender can pursue a deficiency judgment against you.
Key takeaway: The right of redemption in Ontario is powerful — you can stop the sale at almost any stage before closing. The earlier you act, the lower the costs and the more options you have.
Power of Sale Timeline: Key Deadlines
| Stage | Timing | What It Means |
|---|---|---|
| Default | Day 1 | Missed payment or covenant breach |
| Notice of Sale issued | Day 15+ | Formal process begins |
| Redemption period expires | Day 50+ | Lender can now list property |
| Property listed | Varies | Costs accelerate; redemption still possible |
| Offer accepted | Varies | Redemption still possible until closing |
| Sale closes | Varies | Right of redemption extinguished |
Your Rights as a Homeowner in a Power of Sale
- Right of redemption: Pay the arrears and costs at any time before the sale closes to stop the process.
- Right to notice: The lender must serve you with a proper Notice of Sale — defective notices can be challenged.
- Right to surplus proceeds: If the sale price exceeds what is owed, you receive the difference.
- Right to occupy: You remain entitled to occupy the property until the sale closes.
- Right to legal counsel: You have the right to retain a lawyer to review the notice, negotiate with the lender, or dispute improper process.
How to Stop a Power of Sale in Ontario
The most effective way to stop a power of sale is to pay the redemption amount. For most homeowners in distress, this means refinancing — either with a B-lender, private lender, or through equity in the property.
Option 1: Private Mortgage Refinance
Private lenders — individuals and Mortgage Investment Corporations (MICs) — can fund based on property equity rather than income or credit score. A private mortgage can typically close in 3–7 business days, well within the redemption window. This buys time to stabilize finances and refinance with a conventional lender later.
Option 2: Second Mortgage
If your first mortgage is in good standing and only a second mortgage is in default, a new second mortgage can fund the redemption amount. This is often faster and less expensive than refinancing the entire first mortgage.
Option 3: Sell the Property
If redemption is not possible, proactively selling your own property gives you control over the sale price and timeline — and typically yields a higher price than a lender-driven distressed sale.
Option 4: Negotiate with the Lender
Some lenders will agree to a repayment arrangement or temporary forbearance, particularly early in the process. This is more common with private lenders than with institutional lenders, but it is always worth attempting.
Received a Power of Sale Notice?
Paul Hunjan specializes in power of sale bailouts — private mortgage funding that closes in days, not weeks. 15+ years of experience stopping Ontario power of sales.
Get a Free Bailout AssessmentFrequently Asked Questions
How long does power of sale take in Ontario?
From first missed payment to completed sale typically takes 4–6 months or longer, depending on the lender and whether the property sells quickly. The Notice of Sale cannot be issued until after 15 days of default, and the 35-day redemption period must expire before the lender can list the property.
Will power of sale affect my credit?
Yes — the mortgage default will be reported to the credit bureaus and will negatively affect your credit score. A completed power of sale will remain on your credit file for 6 years. However, stopping the power of sale through redemption minimizes the long-term damage compared to allowing the sale to complete.
Can the lender pursue me for a shortfall after power of sale?
Yes. If the sale proceeds are insufficient to cover the mortgage balance and legal costs, the lender can pursue a deficiency judgment against you for the difference. This is an additional reason to act early — distressed sales often achieve below-market prices, increasing the risk of a shortfall.
Do I need a lawyer?
While not legally required, retaining a real estate lawyer is strongly recommended. A lawyer can review the Notice of Sale for deficiencies, advise on your redemption rights, negotiate with the lender's solicitor, and handle the refinancing or sale transaction.
The Bottom Line
Power of sale is serious but not necessarily final. Ontario law gives homeowners meaningful rights — most importantly, the right of redemption up until the sale closes. The key is acting immediately. The earlier you engage a mortgage broker experienced in power of sale bailouts, the more options remain available and the lower the cost of resolution.
If you have received a Notice of Sale or are approaching default, contact Paul Hunjan at 416-820-8601 for a confidential, no-obligation conversation about your options.
