Power of sale, explained step by step.
What it is, how it works, how long you have, and what you can still do at every stage. Plain language, no pressure.
This page is general information only. It is not legal, financial or tax advice, and we are not lawyers. Power of sale rules, notice periods and your rights depend on your own mortgage, your lender and your circumstances, and the law can change. Please speak to a licensed Ontario real estate lawyer about your situation before you make any decision.
What is power of sale?
Power of sale is the right of a mortgage lender to sell your home to recover what you owe after you default on your mortgage.
In a power of sale, you remain the owner until the sale is completed. The lender does not become the owner. If the sale brings in more than you owe plus costs, the money left over belongs to you.
The process, step by step.
Timing depends on your mortgage and your lender. A real estate lawyer can confirm the dates that apply to you.
Payments fall behind
You miss one or more mortgage payments. A lender usually cannot start the formal process until you are behind, and a single missed payment does not mean you lose the home.
What you can do: call your lender right away and ask what they can offer, such as a payment plan or different terms.The lender sends a demand
The lender sends written notice that you are in default and asks you to pay what is owing.
What you can do: talk to a mortgage broker about renewing or refinancing, and speak to a lawyer.Notice of Sale
If the default is not fixed, the lender serves a Notice of Sale. Where your mortgage has a power of sale clause, the notice period is at least 35 days. Where it does not, it is at least 45 days.
What you can do: this is the time to act. You can still sell the home yourself, and an early listing gives the most choice.The redemption period
During the notice period you can bring the mortgage back into good standing by paying the arrears and the lender’s costs.
What you can do: pay what is owing, refinance, or sell. Any of these can stop the lender’s sale if it is done before the sale closes.The lender lists and sells
If nothing changes, the lender can list the home and accept an offer. The home is still yours until that sale completes.
What you can do: you can still sell on your own terms before the lender’s sale closes. A sale through your own agent often brings a better price than a lender-run sale.The money is divided
The sale proceeds pay the mortgage, the lender’s costs and any other debts secured against the home. If money is left, it goes to you.
What you can do: ask a lawyer what happens if the sale does not cover everything owing. A licensed insolvency trustee can help if debt is the bigger problem.
Power of sale or foreclosure?
| Power of sale | Foreclosure | |
|---|---|---|
| Who sells | The lender sells the home on your behalf | The lender goes to court to take ownership |
| Who owns it meanwhile | You, until the sale completes | You, until the court orders otherwise |
| Your equity | Money left after debts and costs is yours | Your equity can be lost |
| How common in Ontario | The usual route | Rare |
A power of sale does not turn into a foreclosure when the notice period ends. They are separate routes the lender chooses at the start.
Common questions.
Can I sell my home after I get a Notice of Sale?
Yes. You remain the owner until the sale completes, so you can still list and sell the home yourself before the lender’s sale closes.
Will I lose all my equity?
Not necessarily. In a power of sale, any money left after the mortgage, the lender’s costs and other debts is paid to you. The earlier you act, the more of your equity you tend to keep.
Do I need money up front to sell?
If there is equity in the home, the costs of selling can be paid from the sale proceeds at closing. See how it works on our mortgage pressure page.
What if the sale does not cover what I owe?
That can happen if the home sells for less than the debts against it. Speak to a real estate lawyer about your own situation, and consider a licensed insolvency trustee before deciding.
Who should I talk to first?
Your lender, a real estate lawyer and a mortgage broker. We can also show you in private what you would walk away with if you sold.
See where you stand.
Check what you would walk away with, or talk to us in confidence. No pressure and no judgement.
General information only. It is not legal, financial or tax advice. Rules and timelines depend on your mortgage and your lender. Speak to a lawyer about your own situation.