Foreclosure proceedings in Ontario are quite speedy, as the proceedings are usually laid out in the       mortgage documents. Power of sale was initially developed in Ontario by lenders who wanted a       faster way to dispose of property and recover debt. As a result, they began to include power of sale       provisions in mortgages that would allow them to dispose of property under the borrower’s default       and without having to resort to the courts. Power of sale is now part of the Ontario Mortgages Act.       The Mortgages Act refers to two types of power of sale: Contractual and statutory. Contractual power       of sale is when the mortgage documents have included power of sale provisions. Statutory power of       sale is when the mortgage documents have not included power of sale provisions. While statutory       power of sale is very rare, the lender can still exercise power of sale as long as the borrower has       defaulted for three months or more.       Both types of power of sale are started by giving a notice to the borrower after 15 days of default. The       notice must be given to anyone having an interest in the property, including subsequent       encumbrancers, statutory lien holders, or people who have advised the lender in writing, that they       have an interest in the property.       The notice is attached to the Mortgages Act, and is called a Notice of Sale Under Mortgage. It       advised of the lender’s intention to exercise the power of sale, and includes details of the mortgage,       such as:           The date the mortgage was made.           The parties to the mortgage and the property mortgaged.           The amounts owing.           A warning that if the amounts owing are not paid by a specified date, the lender will sell the             property.       If the power of sale is contractual, the borrower has 35 days to pay, unless otherwise stated in the       mortgage agreements. If the power of sale is statutory, the borrower has 45 days to pay. The lender       cannot do anything further within this “redemption” period, but by paying the amounts owing, the       borrower can redeem the mortgage.       Once the redemption period expires and the borrower has failed to correct the default, the lender can       sell the property. Under power of sale, the property can be sold by auction, private contract, or       tender. Usually the property is listed with a real estate agent and placed on the market for sale. To       ensure that the property comes to the attention of a large segment of the market, guidelines have       been set up, including; listing the property with a multiple listing service, obtaining appraisals, and       ensuring the listing is for the usual period of such properties.       Once the property is sold and if there is any surplus, the lender must account to the borrower(s), and       other subsequent encumbrancers. The Mortgage Act requires that the proceeds of the sale first be       applied to the cost of conducting the sale, then to interest and cost owing under the mortgage, then       to principal money owing under the mortgage, next to pay any amounts due to subsequent       encumbrancers, and finally to pay tenants’ security deposits.       While ForeclosureCanada.org strives to keep the information on this site accurate and current,       ForeclosureCanada.org cannot guarantee the accuracy, completeness, or timeliness of the       information.       << Back                                                                                                                        Top