Power of Sale

Power of sale is a lender's contractual remedy that lets it sell a mortgaged property to recover money owed on a defaulted mortgage without a court order, and it is the standard enforcement route in some provinces, most notably Ontario.

How power of sale compares with foreclosure

Power of sale is used in some provinces, such as Ontario, while others rely mainly on foreclosure, a court-supervised process that ends with the lender taking title to the property. Under power of sale the borrower keeps title until the sale closes, and the lender must conduct the sale honestly and obtain a fair price. Any surplus left after the mortgage balance, interest, and enforcement costs are paid is returned to the borrower or to other parties with a registered interest in the home. Foreclosure transfers ownership itself, rather than simply converting the property into cash.

What the process typically involves

The steps and timelines come from provincial law and the wording of the mortgage, so they differ across the country. A typical sequence looks like this:

The borrower falls into arrears, which places the mortgage in default.
The lender serves a notice of sale and gives the borrower a redemption period to pay what is owed.
If the borrower does not redeem, the lender lists and sells the property.
The proceeds cover the mortgage, fees, and costs; a shortfall may be claimed in some provinces.

Why it matters to borrowers

Power of sale is less formal than foreclosure, but the outcome is still serious. The home is sold, possession is lost, and the payment history can weigh on a credit report for years. Where sale proceeds do not cover the debt, some provinces allow the lender to pursue the remaining balance. Borrowers who expect to miss a payment can contact the lender early, ask about a payment plan, consider refinancing or selling voluntarily, and obtain independent legal advice. Reading the mortgage documents and the rules for the province where the property sits is the only reliable way to know which remedies apply.

Frequently asked questions

Can a lender sell my home under power of sale without going to court?

In provinces that allow it, yes. Power of sale is a contractual right set out in the mortgage document, so the lender can begin the process by serving notice rather than applying to a court. The procedure, notice period, and redemption rights are set by provincial law, so the exact steps differ. Foreclosure, used in other provinces, is court-supervised.

If my home is sold under power of sale, do I receive any money?

It depends on the sale price and the size of the debt. The lender uses the proceeds to pay the mortgage balance, accrued interest, and enforcement costs such as legal fees and real estate commissions. If money remains, the surplus is paid to the borrower and any other parties with a registered claim on title, in order of priority. If proceeds fall short, some provinces let the lender claim the difference.

How long does a power of sale take?

Timelines vary by province and by the borrower's situation. Provincial law sets a minimum notice and redemption period, and the lender must then market and sell the property, which can take additional months. Borrowers can stop the process before the sale completes by paying what is owed, so contacting the lender and a lawyer early matters.