There is a sinking feeling whenever someone misses a loan payment, which can escalate to a massive problem if unattended. An initial warning may be given, and your expenses will pile up. However, if you continue on this trajectory, as the worst-case scenario, the court might enter a ruling allowing the lender to take away your house. This means they may forcefully evict you and sell your home.
You must be aware of all the steps, from the first missed loan payment to the seizure of your home. If you understand your rights and the duration of each step, you can begin to save your house or explore alternative options before the deadline passes. We will review how you can lose a home in Ontario, touching on each key issue.
What Happens When You Miss Mortgage Payments
Your lender will remind you when you miss a home loan installment. They may advise you of your outstanding balance and warn you about additional charges through a call, email, or a letter. If the situation continues with more missed payments, the warnings become more formal and demand immediate payment.
If you refuse to pay, the lender shall serve a Notice of Sale. This notice would state that they intend to sell the house unless a payment is made by a given date, clearly stating the total amount owed for the final settlement of the loan. It will include the total amount required for missed payments, additional interest charges, extra fees, and all attorney’s fees incurred by the lender. Receiving a Notice of Sale signals that the lender will sell your home to recover their investment.
Statement of Claim: What It Means and How to Respond
A Statement of Claim is a legal instrument to issue a lawsuit against you, the borrower. The Statement of Claim outlines the lender’s grievances, including the mortgage agreement that was breached, the defaults, the amount of money still outstanding, and the relief sought from the court. This can entail a judgment for the lender to repossess the property.
Receiving a Statement of Claim is a serious matter, and you should act immediately. If you ignore it, you will not find an easy resolution; instead, the lawsuit will proceed to default, and the court will rule in favour of the lender. Ordinarily, you have 20 days to file your Statement of Defence in court, which begins to count down from the date listed on the claim. Now is the prime time to speak with a real estate lawyer. A lawyer will explain what the Statement of Claim signifies, assess the strength of your case, and help you prepare and file a robust Statement of Defence that protects your rights and explores potential options to consider.
Redemption Period and How to Use It
Once the court receives a Statement of Claim followed by a hearing, if it sides with the lenders, it may issue a judgment of possession. Typically, such a judgment includes a redemption period, which gives the owner the opportunity to reclaim the property. However, not only will they have to repay the mortgage, but they may need to pay interest, fines, or additional legal expenses.
The redemption period’s time frame usually lasts 35-40 days for power of sale. In the rare case of foreclosure, it can last several months. During this period, you should lay out all the possible options to raise the funds to pay off your mortgage. These might include refinancing through other lenders, assistance from family and friends, or selling the house on your own to clear the mortgage. You should be clear about the duration of your redemption period and actively utilize this time to possibly avert eviction and save your home.
What Is a Writ of Possession?
When homeowners fail to repay during the permissible period, the court will issue a Writ of Possession. This is a legal order that directs the sheriff to eject all occupants from the home and relinquish it to the lender. The Writ of Possession is the last legal step the lender must use before they can possess the property.
Upon a Writ of Possession being issued and granted, the lender shall lodge the writ with the local sheriff. In this capacity, the sheriff acts as an enforcing agency that shall execute the eviction by the court’s orders. The issuance shall ensure that the court is favourable to the lender. If this happens, the homeowner cannot reside in that house anymore. At this point, the homeowner almost does not have another path, and they will need to know when and how the eviction takes place.
Sheriff Evictions: Timeline and Process
After receiving the Writ from the lender, the sheriff will notify the homeowner of when they need to vacate. This timeframe can vary, but usually consists of a few days or a couple of weeks. The homeowners must comply to avoid further complications or even a lawsuit.
On the eviction date, the sheriff will be conversing with the departing tenant and making sure everyone is out. If everyone leaves there voluntarily, then the sheriff has to remove them forcibly. This is a complicated procedure for everyone involved. Homeowners should pack, plan lodging, and coordinate with the sheriff to make the eviction process smoother.
How Private Lenders Handle Mortgage Defaults and Judgments
Private lenders, like banks, may initiate actions for the power of sale or secure a judgment to enforce the sale of a mortgaged property in case of default. However, in exchange for assuming a greater risk, they are often willing to explore alternative solutions early, such as a short-term payment plan, to avoid costly court proceedings and delays.
Nevertheless, these options are more restrictive and come with high interest rates that further deplete the borrower’s resources. When matters get serious, private lenders follow the same power of sale and eviction procedures as other lenders. They may even auction off the property.
Ultimately, failure to meet payment obligations means that the house will be lost. If you understand your loan terms and keep your lender informed, you’re taking the right first steps. Seeking legal help promptly may offer ways to save your home and protect your future.
