Power of Sale

Power of Sale

Power of Sale (POS) is the absolute worst-case scenario a home owner can find themselves in. It happens when you default on your mortgage payments (or void a provision of the mortgage commitment) and the lender takes legal action to remedy the scenario by selling the house. The process is very stressful, costly and time consuming.

Luckily, at Bax Mortgage we have lenders that can help stop a power of sale proceeding before its too late. We can help arrange a new private mortgage to payoff the arrears and legal fees to give you the ability to resolve your situation or give you the opportunity to sell your property.

If you find yourself under power of sale with your mortgage lender, be sure to reach out to us before time runs out. Our team is well versed in the legal process and is more than willing to help.

Below are the basic steps for a power of sale taking place in Ontario:

1. Default Notice
   The first step is when the borrower has breached the mortgage contract, most commonly for a missed mortgage payment. Most lenders will work with the borrower to rectify the situation without taking legal action but when the outcome is not successful, power of sale commences.
2. Notice of Sale
   The lender must wait 15 days after the default to deliver a Notice of Sale. This notice is typically sent by registered mail to all owners of the property, guarantors, as well as any other parties that have interest in the property ie.- a second mortgagee.
3. Redemption Period
   After the Notice of Sale is delivered the lender must wait 35 days. This time period is referred to as the redemption period. This time is crucial for the homeowner to take the necessary steps to try and rectify the situation by bringing the mortgage into good standing or arranging for a new mortgage to pay everything off.
4. Statement of Claim
   If the homeowners do not pay the outstanding balance owed within the timeframe specified, then the lender can file a Statement of Claim with the courts.
5. Sale of Property
   At this time the lender now has authority to list the property for sale. Typically, two appraisals are done to determine the fair market value of the home. The sale proceeds are then used to payoff the outstanding mortgage balance, legal fees and any other costs associated with the sale.  If there are excess funds the homeowners are entitled to receive the money.
6. Judgement
   If the sale proceeds do not cover the mortgage balance, the lender can obtain a judgment against you for the difference. A judgement is an order from the courts for the homeowner to payback the mortgage lender.

For more guidance and legal advice please give us a call and we can point you in the right direction of an experienced local Solicitor who can further explain the process in more detail.