What is power of sale?
Power of sale is a mortgagee's right to sell a mortgaged property upon default, without a court order, and to apply the proceeds against the mortgage debt. In Ontario it is the dominant enforcement remedy — faster and cheaper than foreclosure, and it preserves the lender's right to pursue the borrower for any shortfall.
The right arises contractually (in virtually all standard charge terms) and is regulated by Part III of the Mortgages Act, which imposes notice requirements and waiting periods designed to give the borrower a fair opportunity to redeem.
The timeline, step by step
Day 0 — Default occurs: a missed payment, failure to pay out at maturity, unpaid property taxes or lapsed insurance.
Day 15 — Notice of Sale may be issued: under the Mortgages Act, a notice of sale under mortgage cannot be issued until default has continued for 15 days. The notice is served on the borrower and everyone with an interest in the property — subsequent encumbrancers, execution creditors, statutory lien claimants.
Day 15 to 50 — Redemption period: the notice gives at least 35 days to pay the amounts claimed. During this window the lender cannot take further enforcement steps.
Day 51 onward — Sale process: if the default is not cured, the lender may list and sell. Sale is typically by MLS listing at market value, supported by appraisals — the lender owes a duty to take reasonable steps to obtain fair market value.
Closing and accounting: sale proceeds are applied in strict order — costs of sale, then encumbrances by priority, with any surplus to the borrower.
Where lenders go wrong
The most expensive mistakes we see are procedural: notices with incorrect amounts, service on the wrong parties, selling during the redemption period, and inadequate marketing records that invite an improvident sale claim. Each can delay the sale, expose the lender to damages or force the process to restart.
The second category is documentary: fees not disclosed in the commitment, cost-of-borrowing non-compliance and defective guarantees. These are origination problems that surface at enforcement — which is why lender-side counsel should handle both.
Power of sale vs. foreclosure
Foreclosure vests title in the lender but extinguishes the debt claim — if the property is worth less than the debt, the shortfall is gone. It is also dramatically slower, requiring a court action. For nearly all private lenders, power of sale with a concurrent action on the covenant is the superior strategy.
The takeaway
A clean power of sale in Ontario can move from default to listing in roughly seven to eight weeks. The lenders who achieve that are the ones who enforce promptly, paper correctly at origination and build a defensible marketing record. If a borrower has defaulted, the best time to involve counsel is today.
About the Author
Nooruddin Waliani — Principal Lawyer & Founder
Nooruddin Waliani is the founder of Waliani Law, practising civil litigation, real estate, private lending, criminal defence, family law and estates across Ontario. Called to the Ontario Bar in 2015.