Power of Sale in Ontario: What Actually Happens, and How Long You Have
Almost everything written about power of sale in Ontario is written to frighten you into calling
somebody. I want to do the opposite, because the actual mechanics are knowable, the timeline is set
out in a statute anybody can read, and the earlier you understand it the more choices you have.
I have been on the listing side of these. The pattern is always the same: by the time somebody
calls me, weeks of a very short calendar have already been spent.
Power of sale is not foreclosure
People use the words interchangeably. They are different processes with different outcomes.
- A court process
- The lender ends up owning the property
- Any increase in value goes to the lender
- Slow, and rare in Ontario
- Contractual, under the Mortgages Act
- The lender sells, it does not keep
- Surplus above the debt and costs is yours
- Faster, and the normal route here
That difference matters enormously to you. In a power of sale the lender is recovering a debt, not
acquiring your equity. If your home sells for more than what is owed plus costs, the balance comes
back to you.
The actual timeline, from the statute
Search this topic and you will be told the redemption period is 35 days, or 40 days where a spouse lives in the home. Section 32 of the Mortgages Act says fifteen days of default and thirty-five days after notice. There is no 40 in it. The extra days people are describing come from somewhere else: section 22 of the Family Law Act gives a spouse with possession rights the same notice and the same right of redemption, and section 22(2) deems mailed notice to be served on the fifth day after mailing. Five plus thirty-five is where the number comes from. It matters because it is a service rule, not a longer redemption period, and it does not apply to every case.
What the redemption period is actually for
Thirty-five days sounds like nothing. It is not nothing, and this is the part I most want people
to understand, because it is where every good outcome I have seen came from.
During that window the lender cannot take further steps. You can:
- Bring the mortgage current. Pay what the notice itemizes and it stops. Section
43 deals with payment made in terms of the notice. - Refinance. Private lenders do work in this space. It is expensive. It is
usually cheaper than a forced sale. - Sell it yourself. This is the one people miss, and it is almost always the
best financial outcome available. A property you list deliberately, prepare, and market normally
sells for more than a lender’s sale. You keep the difference.
A lender selling under power of sale has a duty to act in good faith and take reasonable care to
obtain a proper price. What it does not have is your motivation to maximise the number. It needs to
recover the debt. Every dollar above that is yours, and nobody is working that hard for it except
you.
What happens to the money
Proceeds go out in order: the costs of sale, then the first mortgage, then subsequent registered
charges in their priority, then anything left to you. Section 27 of the Act deals with application of
purchase money.
If the sale does not clear the debt, the shortfall does not evaporate. The lender can pursue you
for it personally, which is another reason a better sale price is not an abstract concern.
If you are holding a Notice of Sale right now
- Write down the date on it and count thirty-five days. That is your real
deadline. Everything else is noise. - Call a real estate lawyer today. Not tomorrow. There are defects in these
notices sometimes, and a lawyer is the only person who can tell you whether yours has one. - Find out what the property is actually worth. Not what you hope. If there is
meaningful equity, you have far more options than you think, and most of them beat waiting. - Do not stop talking to the lender. Lenders in this position are recovering
money, not collecting houses. A borrower with a credible plan is usually a better outcome for them
than a sale.
I am a real estate agent, not a lawyer. Power of sale involves statutory notice requirements,
priority rules and potential personal liability, and the details of your mortgage matter. If you
have received a notice, speak to an Ontario real estate lawyer immediately. Many will do a first
conversation at no cost.
The honest part
Nobody reading this wanted to be reading it. But of the situations I have been involved in, the
ones that ended well had one thing in common, and it was not money. It was that somebody looked at
the calendar early and made a decision while decisions were still available.
Where This Comes From
Written from the Mortgages Act, R.S.O. 1990, c. M.40, and the Family Law Act, R.S.O. 1990, c. F.3, read directly on Ontario’s e-Laws site rather than from secondary summaries. Both are free to read.
Frequently Asked Questions
How long does a power of sale take in Ontario?
What is the difference between power of sale and foreclosure?
Can I stop a power of sale once the notice is served?
Do I get any money back after a power of sale?
Does my spouse get notice of a power of sale?
Related Reading
- Home Title Fraud in Ontario
- Mortgage Renewals in Canada
- Your Home Is Not Selling. Now What?
- Closing Costs in Ontario
If you have a notice in your hand, the most useful thing I can give you today is an honest number for what the property would sell for on a normal timeline, so you can see whether there is equity worth protecting. That costs you nothing and commits you to nothing.