A Notice of Sale is a legal document that a mortgage lender can send to a borrower who is in default of their mortgage agreement. A Notice of Sale can be sent at least 15 days after the default and is the first step in the Power of Sale process. This document is sent to all mortgage holders and lenders on the property as well as anyone else who has an interest in the property. Typically a lawyer will perform a subsearch of title on the property and send the Notice of Sale via registered mail. Recipients of this notice include the property owner, spouses, tenants, mortgage holders, lien claimants, and guarantors. This document can be recognized by the title at the top of the document, which is usually “Notice of Sale under Mortgage”. The contents of the notice are fully defined by the Mortgages Act and it typically states that the mortgage is in default, what must be paid, and when the amounts must be paid by. The sample Notice of Sale document provided by the Ontario government can be seen below.
What happens after a Notice of Sale
Once the Notice of Sale is sent, the lender must wait 35 days, or 40 days if the property is occupied by a married couple before further proceeding with the Power of Sale process. These 35 to 40 days is known as the redemption period and lender must accept payment of the items listed in the Notice of Sale during this time period. If the items are paid, the mortgage is put back into good standing, and the mortgage resumes as it normally would. If the mortgage is not paid the lender may file for a Writ of Possession which allows them to evict the homeowners. After the redemption period, the lender can now request the entire mortgage to be paid off, instead of the smaller total amount listed in the Notice of Sale. An average Power of Sale in Ontario takes around 3 months to be complete from beginning to end.
How to Remedy the Situation
Once you receive a Notice of Sale, it is important to act quickly to resolve the issue. As the power of sale progresses, the mortgage lender will charge their legal and administrative fees back to the mortgage and reduce the homeowner’s equity. It is recommended to contact the mortgage lender upon receiving a Notice of Sale, the lender may be able to arrange for you to bring the mortgage back into good standing. In most cases, bringing the mortgage back into good standing means, the borrower must get new financing, they must refinance an existing mortgage, or if financing isn’t possible to arrange to sell the property.
Important Legal Notice
It is important to note that this page is for the purposes as general information and does not go into detail regarding every aspect of a Notice of Sale. It is important for a borrower under power of sale to contact a professional to discuss their options. The team at powerofsalesontario.ca faces these kinds of scenarios on a daily basis, and are available for a free consultation by calling 416-499-2122 or emailing firstname.lastname@example.org