29 Jul Power of Sale Procedure in Ontario
Power of Sale procedure in Ontario
All you need to know about the process:
The power of sale procedure takes effect when someone falls behind on mortgage payments and the lender recovers their investment.
If using the power of sale procedure, both the lender and owner have to follow it. A notice cannot be given about the power of sale until failing to pay the loan for 15 days. The sale of a power of sale property cannot occur for at least 35 days after the lender gives notice.
The lender gives you a minimum of 45 days to complete this portion. This includes the notice of sale, coupled with the requirement of a day to issue the notice of sale at the end of the period. Lawyers provide 40-45 days to issue a notice of sale under the mortgage.
The homeowner can bring the mortgage into good standing. The lender cancels The Notice of Sale if the owner pays the amount required under the notice of sale before the end of the redemption date. However, if the homeowner does not pay, the process moves to the next step.
The notice is attached to the Mortgages Act and is called a Notice of Sale under Mortgage. It advises the lender’s intention to exercise the power of Sale and provides details of the mortgage. This includes the date in which the lender made the mortgage, the parties in the mortgage and properties mortgaged with the amount owing. The lender also includes a warning that if the owner does not pay the amount by a specific date, they will sell the property.
What if the owner does not pay the amount?
If the redemption period passes without the homeowner making payments, the lender is legally able to foreclose the property.
However, If the period of time noted above expires and the homeowner has not paid the mortgage, the lender can issue a statement of claim in the superior court of justice, which will allow them to sell the property to satisfy the debt owing.
Therefore, the Homeowner has 20 days from receiving the statement of claim to issue a Defense. Alternatively, within 30 days, they can issue a Notice of Intent to Defend. If the owner does not file a defence, the lender can get a default judgement.
Judgement issues a writ of possession with the court and to file the same with the sheriff. The sheriff will then evict the homeowner from the property so that the lender can sell it.
Under the power of sale, the bank has the right to sell the property by auction, private contract or tender. Usually, a real estate agent lists the property on multiple services.
This is because the bank has noticed that they can sell the property under the power of sale for current market value.
Once the property is sold and if there is any surplus, the lender must account to the homeowner, and other parties in the same interest the mortgage requires and the proceeds of the sale, then to interest and cost owing under the mortgage, next to pay any amounts due to outside people, and finally to pay tenants security deposits.