Power of Sale

Power of Sale in Ontario: How It Works, Your Rights and Your Options

What a power of sale is, the notice periods the Mortgages Act sets, how a borrower can stop one, and what to check if you are buying a power of sale property.

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What Is a Power of Sale?Power of Sale vs Foreclosure How a Power of Sale Works, Step by Step Power of Sale Notice Periods at a Glance Who Must Get the Notice?If You Are the Borrower: Your Options Where the Sale Money Goes If You Are a Lender Buying a Power of Sale Property How We Help Frequently Asked Questions Related Guides

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The short answer

A power of sale is the process a mortgage lender uses to sell a property when the borrower defaults on the mortgage. The borrower stays the owner until the sale closes, and the lender must follow the rules in Ontario's Mortgages Act, including written notice to everyone with an interest in the property.

When the mortgage itself gives the lender a power of sale, notice can be given once the default has lasted 15 days, and the property cannot be sold until at least 35 days after notice. If the mortgage has no power of sale, the statutory power applies after three months of default and 45 days' notice. Those are legal minimums, not a prediction: how long a real case takes depends on the lender, the mortgage terms and what the borrower does. A borrower can generally stop the sale by paying what is owed, plus the lender's expenses, before the property is sold.

What Is a Power of Sale?

A mortgage is a loan secured against your property. If you stop making payments, or break another term of the mortgage, you are in default. Most Ontario mortgages give the lender the right to sell the property to recover what is owed. That right is called a power of sale.

In the usual case, the lender does not need a court order to sell. It follows Part III of the Mortgages Act, which sets out who must get notice, how the notice is delivered and how long the lender has to wait. You remain the owner until the property sells, and you can still sell it yourself, refinance it or pay the mortgage out. See the Mortgages Act on Ontario.ca.

Power of Sale vs Foreclosure

The two are often mixed up. They are different remedies, and the difference matters to anyone facing either one.

At a glance

Power of sale

Foreclosure

How it works

The lender sells the property to a buyer and uses the money to pay what is owed

A court order ends the borrower's right to get the property back, and the lender takes ownership

Court

Not needed in the usual case; the lender follows the notice rules in the Mortgages Act

A court application is part of the process

How common

The usual route for Ontario lenders

Used less often

How a Power of Sale Works, Step by Step

Default

You miss a payment or break another term of the mortgage. The mortgage sets out what counts as default.

Waiting period before notice

When the mortgage gives a power of sale, the lender cannot give notice of sale until the default has lasted at least 15 days (section 32).

Notice of sale

The lender gives written notice, in the form set by the regulations, to you and to every person who has an interest in the property. It can be served personally or sent by registered mail, and mailed notice counts as given on the day it is mailed (sections 31, 33 and 34).

Notice period

The property cannot be sold until at least 35 days after notice is given. Your mortgage may require a longer wait, and the longer period applies (sections 32 and 37).

Your chance to fix it

Until the property is sold, you can pay the amount due and the lender's expenses and be relieved of the default (section 22). You can also refinance, sell the property yourself or reach a payment arrangement with the lender.

The sale

If nothing changes, the lender markets and sells the property. Courts expect a lender to act in good faith and take reasonable steps to get a fair price.

Closing, payout and registration

The sale money is applied in the order the Act sets (see below), and any surplus goes to the borrower. The transfer to the buyer is registered with statutory declarations from the lender or its lawyer about the default, the service of notice and compliance with the Act.

Power of Sale Notice Periods at a Glance

At a glance

Mortgage with a power of sale

Mortgage without one (statutory power)

Default before notice

At least 15 days (section 32)

Notice may be given after 15 days of default in a payment (section 26); the power itself applies after three months of default (section 24)

Wait after notice

At least 35 days (section 32)

At least 45 days (section 26)

These are minimums. A mortgage can require longer periods, and in limited cases a lender can ask a judge for permission to proceed without giving notice (sections 37 and 39). Your own mortgage and notice are what count.

Who Must Get the Notice?

The lender has to notify more than the borrower. Under section 31, notice goes to the people who have an interest in the property, other than those whose interest ranks ahead of the lender's. That includes:

Anyone with an interest shown in the land records, such as a later mortgage lender.
Creditors with a writ of execution against the owner.
The Crown or another public authority with a statutory lien on the property, if the lender has written notice of it.
Anyone else the lender has been told about in writing before it gives notice.

Getting this list right matters. Whichever side you are on, it is one of the first things your lawyer checks.

If You Are the Borrower: Your Options

A notice of sale is serious, but it does not mean the property is gone. You still own it, and you have choices.

Pay what is owed

Until the property is sold, you can pay the amount due plus the lender's expenses and be relieved of the default (section 22). Ask the lender for a written statement of what is owing.

Make a payment arrangement

Some lenders agree to a plan that brings the mortgage current. Get any agreement in writing before you rely on it.

Refinance

A new lender may pay out the existing mortgage, if you qualify. This takes time, so start early.

Sell it yourself

You are still the owner, so you can sell, pay out the mortgage from the proceeds and keep what is left. That keeps the timing and the price in your hands.

Each option has deadlines, and the sooner you speak with a lawyer after you receive a notice, the more of them stay open. Our power of sale lawyers explain your options in plain language, and our refinancing service can act if a new mortgage is the way out. A mortgage default can also be reported to credit bureaus and can affect your ability to borrow later.

Where the Sale Money Goes

Section 27 of the Mortgages Act sets the order in which the money from a power of sale is applied:

The expenses of the sale, including any attempted sale.
The interest and costs due under the mortgage that was enforced.
The principal owing on that mortgage.
Amounts owed to later lenders and creditors, in order of priority.
Any tenants’ rent deposits that were not applied to the last rent period.

Whatever is left is paid to the borrower. If the sale does not cover everything owed, the lender may take steps to recover the shortfall. How that works depends on your mortgage and the facts, so ask a lawyer before you assume the debt ends with the sale.

If You Are a Lender

Lenders, including private lenders, need to follow the notice rules exactly. A mistake can delay the sale, and a person harmed by a non-compliant sale has a remedy against the lender (section 36). A lender or its lawyer should:

Confirm that the mortgage gives a power of sale and what counts as default.
Wait out the default period before giving notice: 15 days, or three months under the statutory power.
Prepare the notice in the prescribed form and serve everyone entitled to it.
Keep proof of service, such as the registered mail receipt.
Sell in good faith and take reasonable steps to get a fair price.
Prepare the statutory declarations on default, service and compliance that support the transfer.

If you lend privately, clear power of sale terms in the mortgage help from the start. Our private lending service drafts private mortgages, and our power of sale service acts for lenders who need to enforce one.

Buying a Power of Sale Property

A home that a lender is selling can be a good opportunity, but the sale works differently from an ordinary one. The lender is the seller, and a lender usually knows little about the home's condition. Here is what we look at for buyers.

Terms set by the lender

Lenders often set their own conditions, and these can be stricter than in an ordinary sale. Have your lawyer read them before you make an offer.

Condition of the home

Lenders commonly sell without promises about the property's condition, so a home inspection matters. Your lawyer explains what the agreement does and does not say.

Proof the sale was done properly

We review the lender’s statutory declarations on default, service of notice and compliance with the Mortgages Act. They are what supports the transfer on registration (section 35). See the Ontario land registration bulletin on powers of sale.

Title and other claims

We search title for other charges, liens and executions and confirm what the sale clears. Some registrations, such as construction liens, condominium liens, tax arrears and certificates of pending litigation, are not removed automatically, so each one needs a check.

Section 36 of the Mortgages Act protects a buyer’s title when the lender gave notice in professed compliance with the Act, and a person who was harmed can claim against the lender. That is a safety net, not a reason to skip the review. Budget for the usual costs too: see our closing costs guide and our title insurance guide.

How We Help

We act for lenders and borrowers in power of sale matters across the GTA, and for buyers purchasing a property a lender is selling. We serve clients in English, Hindi and Punjabi. If you have received a notice of sale, or you are thinking about buying a power of sale property, call (647) 696-8069 or book a free consultation below. See our power of sale service and our residential purchase service.

Frequently Asked Questions

What is power of sale in Ontario?
It is the way a mortgage lender sells a property to recover the money owed after the borrower defaults. The lender follows Part III of the Mortgages Act, including written notice to everyone with an interest in the property.
How long does a power of sale take?
The law sets minimums, not a standard timeline. Where the mortgage gives a power of sale, notice cannot be given until the default has lasted 15 days, and the sale cannot happen until at least 35 days after notice. Under the statutory power the figures are three months of default and 45 days’ notice. A real case depends on the lender, the mortgage terms and what the borrower does.
Can I stop a power of sale?
Generally yes, until the property is sold. You can pay the amount due plus the lender’s expenses and be relieved of the default, or you can refinance or sell the property yourself. Speak with a lawyer early about which option fits.
Do I lose my home as soon as I get a notice of sale?
No. You remain the owner until the property is sold. The notice starts the minimum waiting period, and you have options during it.
What happens if the property sells for more than I owe?
The money is applied in the order set by section 27 of the Mortgages Act: sale expenses, interest and costs, principal, later lenders and creditors, and tenants’ rent deposits. What remains is paid to the borrower.
What if it sells for less than I owe?
The lender may take steps to recover the shortfall. How that works depends on your mortgage and the facts, so ask a lawyer before you assume the debt ends with the sale.
Is power of sale the same as foreclosure?
No. In a power of sale, the lender sells the property to a buyer under the Mortgages Act. Foreclosure is a court process in which the lender takes ownership. Power of sale is the usual route for Ontario lenders, and foreclosure is used less often.
Can I buy a power of sale property with a mortgage?
It can be possible, but the lender selling the property sets the terms of its offer, and your own lender must approve the purchase. Talk to your lawyer and your mortgage lender or broker before you make an offer.
Does a power of sale affect my credit?
A mortgage default can be reported to credit bureaus and can affect your ability to borrow later. Selling or refinancing before the lender sells may limit the effect, so speak with a lawyer early.

Legal Information, Not Legal Advice. This guide summarizes the Mortgages Act, R.S.O. 1990, c. M.40, as shown on Ontario.ca (current to October 20, 2026), and the Ontario land registration bulletin on powers of sale, checked on October 23, 2026. Mortgage terms, notice periods and the law can differ in your case, so speak with a real estate lawyer before you act on this guide.

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