Power of Sale in Ontario: How It Works, Your Deadlines, and What You Can Do
This article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a licensed lawyer before making any legal decisions.
Quick answer
- Power of sale is a lender’s right to sell a mortgaged Ontario property after the borrower defaults, generally without a court order. It is not foreclosure: the lender sells the home rather than taking ownership of it, and any surplus left after the debt and costs is typically paid to the borrower.
- Ontario runs two notice regimes under the Mortgages Act, so no single timeline applies to every mortgage. Where the mortgage itself contains a power of sale clause, the lender may proceed after a default of at least 15 days and at least 35 days notice to every person with an interest in the property. Where the mortgage contains no such clause, the statutory power may be exercised after three months of default and 45 days notice.
- A homeowner remains the owner until the sale is completed. Options that may be available during that period include bringing the mortgage back into good standing, refinancing, selling the property privately, or challenging the lender’s conduct or the notice itself.
The envelope usually arrives from a law firm you have never heard of. Inside is a document titled Notice of Sale Under Mortgage, and somewhere on it is a date.
That date matters. It is not, however, the day you lose your home. A lender in Ontario that wants to recover a mortgage debt has to follow a process set out in the Mortgages Act, and that process builds in a defined period for you to respond. You remain the owner of the property until a sale is actually completed.
This guide covers what power of sale is, how it differs from foreclosure, why Ontario uses two different notice periods, what a lender owes you while the process runs, what happens to your equity afterwards, and the options that may be open to you along the way.
Quick Start: Find Your Path
Not everyone reading this is at the same point. Find the box that matches your situation and start there.
Behind, no lawyer letter yet
Payments are behind, but nothing has arrived from a lawyer. Options are widest here. Start with what to do before a power of sale begins.
Notice of Sale received
Read the two notice periods next, then the roadmap, so you can identify where in the sequence you actually are.
Listed or already sold
Skip to surplus and deficiency. The questions that matter now are about money rather than the house.
Private lender or second mortgage
Timelines are often shorter, and costs are higher. Read the notice periods, then the options section.
Wherever you start, the terms of your own mortgage may change how the general rules apply to you.
Power of Sale, Foreclosure, and Judicial Sale Compared
The distinction matters because of what happens to your equity, which is the value of the property minus the debts or liabilities you owe against it. In a power of sale, the lender takes the debt and its costs out of the sale proceeds. Any remaining money is typically paid out to the people entitled to it, starting with you, the property owner. A foreclosure, meanwhile, works differently. If the court grants title to the lender, all remaining equity goes with it.
One point is often stated incorrectly online. A power of sale does not convert into a foreclosure when the notice period ends. They are separate routes chosen at the outset, and power of sale is the standard one in Ontario. If you are unsure which you are in, a mortgage litigation lawyer can read the documents and tell you.
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Three Ontario Mortgage Enforcement Routes at a Glance
Power of sale, foreclosure, and judicial sale are separate remedies. A power of sale does not become a foreclosure when the notice period ends.
| Route | Does the lender take ownership? | Is a court order ordinarily required? | What happens to any surplus? | How common in Ontario? |
|---|---|---|---|---|
| Power of sale | No. The lender sells the property and does not take ownership of it. | No. It is generally exercised without a court order. | Applied to the costs of the sale, then the debt, then other registered claims. Anything left over is typically paid to the borrower. | The standard mortgage enforcement route in Ontario. |
| Foreclosure | Yes, if the court grants title. The lender asks a court for legal ownership of the home. | Yes. It runs through the court. | If the court grants title to the lender, all remaining equity goes with it. | Used far less often than power of sale. |
| Judicial sale | No. The property is sold, but the sale is supervised by the court. | Yes. It runs through the court. | Distributed under the court's direction after the costs of the sale and the debt. | Used far less often than power of sale. |
No court order
A power of sale is generally exercised without going to court.
You keep title
You remain the registered owner until a sale is completed.
Surplus is yours
Money left after the costs and the debt is typically paid to the borrower.
Source: Mortgages Act, R.S.O. 1990, c. M.40, Parts II and III, and Government of Ontario, Power of sale assignments. General information only, current as of August 2026.
Nihang Law Professional Corporation · Law Society of Ontario
Ontario’s Two Notice Periods and Where They Come From
This is why the timelines quoted online conflict. Both sets of numbers are correct, but they belong to different regimes, and only one is yours.
Notice also reaches further than you may expect. It goes to every person with an interest in the property, which can include a second mortgage lender or a creditor holding a lien.
How to tell which regime applies to your mortgage
Look at the charge registered against your property and the standard charge terms that go with it. Most institutional mortgages in Ontario contain a power of sale clause, which puts them under Part III. If you cannot locate it, your lawyer can pull it from the land registry.
How a Power of Sale Typically Unfolds
The sequence below is typical. Individual files move faster or slower depending on the mortgage terms, the lender, and what the borrower does at each stage.
Missed payments and early contact. Most lenders apply a short grace period, then add a late charge and report the missed payment. Contact from a collections department often follows.
Demand letter. The lender’s lawyer may write demanding payment of the full outstanding balance rather than just the arrears, meaning the payments you have fallen behind on.
Notice of Sale. This is the formal document. It states the amount claimed and the date by which it must be paid, and it goes to everyone with a registered interest in the property.
The notice period. During this window you may redeem the mortgage, meaning pay what is required to stop the sale from proceeding. What “what is required” means can differ depending on the stage and the mortgage terms.
Possession and listing. If the default is not resolved, the lender may take steps to obtain possession and list the property for sale, typically in as-is condition.
Sale and distribution. Once a sale closes, the proceeds are applied in order: the costs of the sale, then interest and principal owing, then other registered encumbrances, meaning claims against the property, according to their priority. Anything left over goes to you.
The whole sequence often runs several months from first missed payment to completed sale, and issues that call for real estate law services can arise at almost any point in it.
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The Ontario Power of Sale Sequence
Ontario runs two notice regimes, so no single timeline applies to every mortgage. The two clocks differ at the start and rejoin at the sale. Every stage below is typical rather than fixed.
Track A
Where the mortgage contains a power of sale clause
Part III of the Mortgages Act
STEP 1
Default
of at least 15 days
STEP 2
Notice of Sale
at least 35 days
STEP 3
Possession and listing
timing varies
STEP 4
Sale and distribution
proceeds applied in order
Track B
Where the mortgage contains no such clause
Part II statutory power
STEP 1
Default
of three months
STEP 2
Notice of Sale
45 days
STEP 3
Possession and listing
timing varies
STEP 4
Sale and distribution
proceeds applied in order
Which track applies depends on the mortgage document, not on the lender. Notice goes to every person with an interest in the property, which can include a second mortgage lender or a creditor holding a lien. You remain the owner until a sale is completed.
Source: Mortgages Act, R.S.O. 1990, c. M.40, Parts II and III, and Government of Ontario, Power of sale assignments. Timelines are general information only and are not a deadline for any individual mortgage. Current as of August 2026.
Nihang Law Professional Corporation · Law Society of Ontario
What the Lender Owes You Before a Sale
This matters because a sale conducted below what the property was reasonably worth affects you directly. Less money from the sale means less surplus, or a larger shortfall that may follow you afterwards.
If you have reason to think the property was marketed poorly, sold unusually quickly, or sold at a price that does not reflect the market, that is worth raising early rather than after closing. Nihang Law’s civil and commercial litigation team handles disputes of this kind.
Surplus, Deficiency, and What Happens to Your Equity
If the sale clears the debt
You may be entitled to the money left over. Ask for a full accounting from the lender showing the sale price, every deduction, and how the balance was calculated. Errors and unreasonable cost claims can happen, and they are easier to challenge before funds are distributed.
If the sale does not clear the debt
The shortfall is called a deficiency, and the lender may pursue you for it. That can lead to a judgment and then to enforcement steps such as wage garnishment and bank account seizures in Ontario. This is one reason the sale price is worth paying attention to at the time.
Options That May Be Available Before a Sale Closes
Refinancing is the option most often promoted, frequently by people who sell mortgages. It can work. It also carries lender fees, broker fees, and legal costs. Where a bank declines, a private mortgage may carry a materially higher rate. It is one option among several rather than the answer for every file.
Selling the property yourself often produces a better price than an as-is lender sale, because you control the timing and presentation. Negotiating a standstill, meaning an agreement by the lender to hold off while something specific is arranged, may be possible where there is a concrete plan to point to.
Common Mistakes Homeowners Make
- ▪Treating the Notice of Sale as junk mail. The clock runs whether or not the envelope is opened.
- ▪Assuming the date on the notice is the last day to act. Some routes need weeks of lead time.
- ▪Assuming that catching up on arrears is always enough. Depending on timing and the mortgage terms, the lender may be entitled to demand the full balance.
- ▪Signing a rushed private mortgage without checking the licence. Ontario brokerages, brokers, and agents are licensed by the Financial Services Regulatory Authority of Ontario, and the public register allows consumers to verify a broker’s current standing.
- ▪Not asking how the property is being marketed. The lender owes duties about price, which are hard to rely on if nobody looks.
- ▪Moving out earlier than required. An empty property may show poorly, which can affect the sale price.
If the financial pressure started with a mortgage renewal you cannot afford rather than a missed payment, the position may differ again.
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Mortgages 90 or More Days in Arrears: Canada and Ontario
Falling behind is more common than most homeowners assume. Arrears rates remain low in absolute terms, but Ontario has been rising faster than the country as a whole.
0.24%
Of Canadian mortgages were 90 or more days in arrears in Q4 2025, up from 0.21% a year earlier.
+35%
Year-over-year rise in Ontario's arrears rate, the sharpest deterioration of any province.
+45%
Year-over-year rise in Toronto, among the largest increases of any Canadian market.
Source: Canada Mortgage and Housing Corporation, Residential Mortgage Industry Report, based on Equifax Canada data. Arrears means mortgages 90 or more days past due. The Ontario Q4 2024 figure is derived from CMHC's reported 35 per cent year-over-year increase. Published quarters only, current as of August 2026. Historical figures are not a prediction of future rates.
Nihang Law Professional Corporation · Law Society of Ontario
Questions Ontario Homeowners Ask
How long do I have before the bank can sell my house?
Is power of sale the same thing as foreclosure?
Can I stop a power of sale by paying what I owe?
Do I get any money back if my house sells for more than the mortgage?
Can the lender come after me if the house sells for less than I owe?
Can I sell the house myself instead of letting the lender sell it?
Does the lender have to get a fair price for my home?
Where to Get Help
A power of sale is a defined legal process with deadlines built into it, not a single event, and you remain the owner until a sale is completed. The earlier you get advice, the more options stay open.
Before speaking to anyone, gather four things: the Notice of Sale, your mortgage or charge document, your most recent mortgage statement, and any correspondence from the lender’s lawyer.
Qasim Ali, Principal Lawyer at Nihang Law works with homeowners across Toronto, Scarborough, and the wider GTA on mortgage enforcement matters.
Talk it through with someone who reads these documents every week
Nihang Law is a full-service Ontario firm, so a power of sale file that also touches your real estate, private lending, or litigation position can be handled under one roof.
Contact Nihang LawThis article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a licensed lawyer before making any legal decisions. Nihang Law Professional Corporation is regulated by the Law Society of Ontario.
About the author
Qasim Ali
Principal Lawyer · Nihang Law Professional Corporation · Toronto & Scarborough, Ontario · Law Society of Ontario
Qasim Ali is the Principal Lawyer at Nihang Law Professional Corporation, serving clients across Toronto, Scarborough, and the broader Greater Toronto Area. He provides full-service legal representation across immigration, real estate, family law, criminal law, civil litigation, employment law, wills and estates, and business law.
Nihang Law is particularly recognized for its depth in immigration and real estate law — a combination that serves newcomers and growing families navigating both legal systems simultaneously.
Learn more about Qasim Ali →Sources and References
- Mortgages Act, R.S.O. 1990, c. M.40, Parts II and III — Government of Ontario, e-Laws. ontario.ca/laws/statute/90m40
- Power of sale assignments — Government of Ontario. ontario.ca/page/power-sale-assignments
- Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 244 — Justice Laws Website, Government of Canada. laws-lois.justice.gc.ca/eng/acts/B-3
- Financial Services Regulatory Authority of Ontario — mortgage brokerage, broker, and agent licensing. fsrao.ca
- Residential Mortgage Industry Report — Canada Mortgage and Housing Corporation. cmhc-schl.gc.ca
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