Power of Sale Lawyer Toronto: What Lenders and Borrowers Need to Know
A power of sale is the legal process by which a mortgage lender sells a property when the borrower has defaulted on their loan payments. In Ontario, lenders must follow strict procedural requirements under the Mortgages Act, including providing proper notice of sale to the borrower, waiting the mandatory notice period (35 to 45 days depending on the type of notice), and conducting the sale in a commercially reasonable manner to obtain the best possible price.
Borrowers facing a power of sale have important rights and options that should be explored as early as possible in the process. These may include paying the full amount owing including arrears and legal costs to stop the process entirely, negotiating a repayment plan with the lender to bring the mortgage current, refinancing the property with a new lender to pay out the existing mortgage, or selling the property themselves before the scheduled power of sale date to achieve a better price and avoid a power of sale on their credit record.
At Sarkaria Sethi LLP, we represent both lenders and borrowers in power of sale proceedings across the GTA. For lenders, we ensure the process is conducted correctly from start to finish to avoid legal challenges. For borrowers, we protect your rights and explore all available options to help you keep your property or transition out of ownership on your own terms.
Want the full picture? Read our guide to power of sale in Ontario, including the notice periods, how a borrower can stop a sale and what to check when buying a power of sale property.
Frequently Asked Questions
How long does the power of sale process take?
The legal minimums are at least 35 days between notice and sale where the mortgage gives a power of sale, and 45 days under the statutory power. How long a real case takes depends on whether the borrower takes steps to remedy the default, negotiate a resolution, or contest the process.
Can a borrower stop a power of sale once it starts?
Yes. A borrower can stop a power of sale at any time before the sale closes by paying the full amount owing including all arrears, interest, and the lender’s legal costs. Alternative options include negotiating a repayment plan or refinancing with another lender.
What happens to surplus proceeds after the sale?
Sale proceeds pay the lender’s outstanding mortgage balance, legal fees, and reasonable selling costs. Any surplus belongs to the borrower and must be held in trust by the lender’s lawyer. If there is a shortfall, the lender may pursue the borrower for the difference.
Does a power of sale affect the borrower’s credit?
Yes. A power of sale will appear on the borrower’s credit report and can significantly affect their ability to obtain future financing. This is one reason it is often better for the borrower to sell the property themselves before the power of sale proceeds.
Our office is in Vaughan, and we serve clients across Toronto and the GTA, including North York, Scarborough, Etobicoke, Mississauga, Brampton, Markham, Richmond Hill and Newmarket. See all of our areas we serve.
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Contact Sarkaria Sethi LLP at (647) 696-8069 or reach out online. We serve clients in English, Hindi, and Punjabi.
Legal Information, Not Legal Advice. This page provides general information about real estate legal services in Ontario. Every real estate transaction is unique, and you should consult with a qualified real estate lawyer about your specific situation before taking any action.