Power of sale
The BrokerFold Team — Product + Engineering
Last reviewed
Power of sale is a lender’s remedy that permits the sale of a mortgaged property after default without the lender ever taking ownership. The mortgagee sells, applies the proceeds to the mortgage debt and costs, pays out subsequent creditors in priority order, and returns whatever is left to the owner. It is the dominant enforcement route in Ontario, where mortgage law and standard charge terms make it faster and cheaper than court-driven foreclosure.
How the process runs
The mechanics are notice-driven rather than court-driven. After default, the lender issues a statutory notice of sale and must wait out the redemption windows the law prescribes before selling — periods in which the owner can still bring the mortgage current or pay it out. Once the windows close, the property is typically listed on MLS through an ordinary brokerage, negotiated through an ordinary agreement of purchase and sale with lender-specific schedules attached, and closed like any other deal. The owner keeps a live interest to the end: because the surplus belongs to them, the lender owes duties around obtaining fair value, and courts will scrutinize a careless sale.
What buyers are actually signing
The lender selling under power of sale never lived in the house, and its schedules say so at length: no representations about condition, appliances, or history, and often no warranty that fixtures work on closing. Sellers’ ordinary disclosure instincts don’t apply — a material latent defect the lender genuinely doesn’t know about is a risk the buyer prices in. Inspections, title review, and a lawyer who has read the schedules before the offer goes in are not optional extras here. Occasionally a distressed situation resolves creatively instead — a vendor take-back mortgage is one of the tools that keeps a sale conventional.
Why it matters for your website
“Power of sale” is one of the most durable consumer search phrases in Ontario real estate — equal parts bargain hunters and stressed owners. An honest explainer serves both: buyers learn why the discount is smaller than the internet promised, and owners in default learn they have more options and more time than they feared. Both are exactly the readers an agent’s website exists to reach.
Frequently asked questions
What's the difference between power of sale and foreclosure?
Under power of sale the lender sells the property, pays the debts, and returns any surplus to the owner — title never passes to the lender. Under foreclosure the lender takes ownership itself, and the borrower's equity is extinguished with the title. Ontario practice runs overwhelmingly on power of sale; foreclosure and judicial sale are more common in some other provinces.
Are power of sale properties bargains?
Rarely as much as buyers hope. The lender is obliged to act in good faith and take reasonable steps to obtain fair value — surplus belongs to the owner, and an improvident sale invites a lawsuit — so these listings are marketed on MLS at market-tested prices. The real difference is condition and disclosure, not a discount.
Can the owner stop a power of sale?
Until late in the process, generally yes — by bringing the mortgage into good standing or paying it out within the windows the law provides. Owners in default have more redemption room than they usually realize, which is why timelines matter and legal advice early is worth it.
Keep reading
- Vendor take-back mortgage A vendor take-back mortgage is seller financing: the vendor lends part of the price, registered on title — common when rates climb and markets slow.
- Material latent defect A material latent defect is a hidden problem a seller must disclose — how BC and Ontario define it and where the line sits with buyer beware.
- Agreement of purchase and sale The APS is the contract at the centre of every Ontario home sale — offer, acceptance, deposit, conditions and closing terms in one document.