How to Stop a Power of Sale in Ontario | Legal Options for Borrowers
How to Stop a Power of Sale in Ontario | Legal Options for Borrowers
What Is a Power of Sale in Ontario?
In Ontario, lenders typically enforce mortgages through the power of sale process rather than foreclosure. This allows the lender to sell the property if the borrower defaults on the mortgage.
Before selling the property, the lender must serve a Notice of Sale under Mortgage, giving the borrower an opportunity to remedy the default.
However, receiving a Notice of Sale does not automatically mean the property will be sold. Borrowers often have several legal options to stop or delay the process.
Option 1: Pay the Arrears (Cure the Default)
The simplest way to stop a power of sale is to pay the arrears and bring the mortgage back into good standing.
This usually involves paying:
- missed mortgage payments
- accrued interest
- legal costs incurred by the lender
If the arrears are paid within the notice period, the lender cannot proceed with the power of sale.
Option 2: Redeem the Mortgage
Borrowers also have the right to redeem the mortgage by paying the full amount owing, including principal, interest, and enforcement costs.
This right generally continues until the lender enters into a binding agreement to sell the property.
Many borrowers redeem the mortgage through:
- refinancing with another lender
- selling the property themselves
- obtaining private financing
Option 3: Negotiate With the Lender
In some cases, lenders may be willing to negotiate solutions such as:
- payment plans
- mortgage restructuring
- short-term extensions
- repayment agreements
Lenders often prefer repayment arrangements because power of sale proceedings can be costly and time-consuming.
Option 4: Challenge the Enforcement Process
Mortgage enforcement must comply strictly with the Mortgages Act and the terms of the mortgage agreement.
A borrower may be able to challenge the process if:
- the Notice of Sale contains errors
- the lender miscalculated the amount owing
- required parties were not properly served
- the lender breached contractual obligations
Legal challenges may delay enforcement or invalidate the notice.
Option 5: Seek Court Relief
In certain circumstances, borrowers may seek relief from the court.
Courts may intervene where:
- the lender acts in bad faith
- enforcement procedures were defective
- the borrower pays the amount owing into court
Although courts generally allow lenders to exercise their rights, they may intervene in exceptional circumstances.
Speak With a Power of Sale Defence Lawyer
If you receive a Notice of Sale, it is critical to obtain legal advice immediately. Early action may allow you to:
- negotiate with the lender
- explore refinancing options
- challenge enforcement steps
- protect your property