Understanding Power of Sale in Ontario

Let me tell you about a family I met recently, let’s call them the Thompsons. For years, they enjoyed living in a peaceful Ontario suburb, raising their kids, making memories, and never missing a mortgage payment. However, when the economy shifted and property values fluctuated, everything changed.

I remember when the Thompsons called me, their voices tense with worry, they had just received a Notice of Sale in the mail. Like many homeowners, they didn’t initially realize how serious it was, but a Notice of Sale marks the start of Ontario’s legal power of sale process. If you miss payments and are in default for at least 15 days, your lender can send you that notice. If the payment remains overdue for three months, the lender can proceed with the power of sale.

When the Thompsons asked if they would lose their house right away, I reassured them that, under the power of sale, the lender doesn’t simply take the home away. Instead, the lender has the legal right to sell the property, and any remaining surplus is returned to the homeowner.

I often need to clarify the difference between power of sale and foreclosure. In a foreclosure, the lender goes through the courts, takes full ownership, and you lose both your home and any future equity. With the power of sale, the lender sells the property, and you might recover some equity. It is usually faster and less costly. Foreclosure means the bank owns your house; power of sale means they have the right to sell it, but it is still technically yours until it is sold.

In Ontario, borrowers usually have at least 35 days to redeem their mortgage. This means that if you can gather the funds to cover missed payments, interest, legal fees, and penalties, you can bring your loan back into good standing and stop the process.

Lenders usually encourage borrowers to contact them early, explore relief options, and provide clear information. None of these protections matter if you don’t answer the phone or open the letter. I always tell my clients: silence is your worst enemy in these situations.

Contact the lender immediately. The sooner you reach out, the more options you will have, such as payment deferrals, temporary interest-only plans, or extending your amortization period. You can also explore refinancing before the lender lists the property, sometimes that involves obtaining a second mortgage, a private refinance, or using equity to cover arrears. Once the lender lists your home, costs rise and your options shrink.

For some families I have worked with, a controlled sale is the best option, selling the house on your own terms before the lender gets involved. When you decide to sell, you choose your agent, handle your pricing strategy, lower legal fees, and retain more of your hard-earned equity. When the lender sells, their main goal is to recover what’s owed, not to maximize your return. That is a tough truth, but an important one.

If there is one thing many homeowners wish they had done differently, it’s preparing for the unexpected. I always advise homeowners to keep 3–6 months of mortgage payments in reserve, avoid borrowing to the max, and, most importantly, open every letter from the bank. Buying a home is only half the journey. Managing it, especially during difficult markets, is the other half of the equation.

Power of sale is not an immediate eviction. It is a structured legal process that balances lender efficiency with borrower protection. You have the right to redeem, the right to surplus funds, and the right to fair market value.

In real estate, I have seen delays cause families to lose their homes and peace of mind. If you’re falling behind, don’t wait, take action today.