Power Of Sale: What you Need to Know & Steps to Take Next

If you’ve received a Notice of Sale from your lender, or are concerned that you might – don’t be stressed. Instead, let’s discuss Power of Sale in Ontario and review some steps that you can take and options that you can consider to resolve your situation as painlessly and stress-free as possible.


Power of sale is a legal process where a lender can sell a borrower’s property to recover outstanding mortgage payments. It is an alternative to foreclosure, which is a court-ordered sale. It is important to avoid power of sale on your house because it can have serious consequences that can impact your financial stability and future prospects. In Ontario, the power of sale procedure is initiated when a homeowner falls behind on mortgage payments. The power of sale provision allows the lender to sell the property in the event of default. However, before any action can be taken, there are specific timelines and requirements that must be followed.


Once a default occurs, there is a mandatory 15-day grace period before a notice of power of sale can be issued. Following the notice being issued, at least 35 days (40 if you are married) must pass before the Power of Sale can proceed. During this time, homeowners have the right to reinstate the mortgage by bringing the outstanding payments up to date and paying any applicable fees. If the necessary payments are made before the redemption date, the power of sale process will be halted. It’s important that you take action right away and explore the best option to resolve your situation to protect your credit score, the equity in your home, and avoid fines, and penalties.

After the Redemption Period

If the homeowner is unable to settle the outstanding debt before the redemption period expires, the lender has the right to proceed with legal action. This involves issuing a Statement of Claim to collect the debt owed and obtain possession of the property. Once the Statement of Claim is served, if the homeowner does not file a Statement of Defence, the lender may obtain a default judgment. To proceed further, the lender must seek court approval through a motion to obtain a Writ of Possession. This writ is then delivered to the sheriff’s office in the jurisdiction where the property is located. The sheriff, in coordination with the lender, schedules a date for the eviction process.

Seek Guidance

We understand that this can be a difficult and overwhelming experience. If you are in a situation where you have passed the redemption period in the Power of Sale process we recommend seeking guidance from an experienced lawyer. Their expertise can provide you with valuable insights and help you make informed decisions throughout the process.

Facing the possibility of power of sale can be an overwhelming experience. We understand the difficult decisions that you’ve got in front of you right now. Feel free to reach out to us to have a no-obligation discussion about your situations, and what options might be available to you.

Credit Implications, Loss of Equity, & The Potential for Additional Debt

When a lender initiates a power of sale, it can be reported to credit bureaus and remain on your credit report for up to seven years. This can make it difficult for you to secure credit in the future, including loans, credit cards, and even employment opportunities that require a credit check. Additionally, when a lender sells your property through power of sale, they are only required to recover the outstanding mortgage balance, legal fees, and other associated costs. If the sale price is less than the outstanding balance, you will be responsible for the difference.

What Can You Do?

So, what can you do to avoid power of sale? Power of sale can have a serious impact on your future. If you’re having issue staying current on your mortgage payments, perhaps due to job loss or an unfortunate life situation, it’s often prudent to seek out professional advice from a lawyer, or considering refinancing/restructuring your current loan. If these options don’t fit your need, consider contacting us to discuss where you are in the process and see if we can offer a solution that will help you avoid the power of sale process and protect your financial future.

Debt Restructuring

If you are experiencing financial difficulties, it is important to reach out to your lender as soon as possible to discuss your options. Lenders may be willing to work with you on a repayment plan or other alternative solutions.

Refinancing Your Mortgage/ Acquiring New Financing

Refinancing can help you secure a lower interest rate, reduce your monthly payments, and help you avoid defaulting on your mortgage. However, it is important to consider the costs associated with refinancing, including closing costs, appraisal fees, and other expenses. it’s also important to remember that most banks will not extend financing to a property in power of sale, so you make need to look for a private lender or structure a multi-step transition strategy utilizing different financing types. If you this this is the best option for you, we highly recommend contacting a mortgage broker with expertise in this area.

Let’s Chat

If you’ve found yourself in a situation where you’re facing your bank or mortgage holder calling a Power of Sale on your property, we may be able to help. We can discuss a creative solution that will help you avoid further financial and emotional pain, refer you to an expert in our network completely free of charge, or even make an offer for your house if you’re ready to just get a fresh start. Contact us today to discuss the best options to resolve your issue!