There are times when Ontario homeowners may have fallen behind in monthly mortgage payments. Financial circumstances may change and the mortgage may fall into arrears. In circumstances like this, a lender has the legal right under the Canadian Mortgages Act to start to initiate proceedings to try to put the mortgage in good standing. If the property owner fails to make up the arrears then the methods open to the lender to utilize when dealing with mortgage default include the power of sale and foreclosure.
Regardless of the method used to address mortgage default, there are legal steps that your lender must follow before you are forced to vacate your property and allow the lender to sell it. These steps may start as soon as you miss a mortgage payment or a lender, which is often the case in foreclosure, may wait for up to 6 mortgage payments before taking legal action to start the foreclosure process on your home. The basic steps remain the same in both default methods:
1. Allow for a specified period– in the power of sale process 15 days is required, in foreclosure, it often takes longer for the lender to start proceedings
2. Send a Notice of Sale to Borrower- In both default mechanisms, a letter referred to as Notice of Sale must be sent to the homeowner. This letter will indicate that the homeowner has a redemption period to try to bring the mortgage payments out of arrears
3. Lender Will Issue a Statement of Claim- If the mortgage is not put in good standing at the end of the redemption period the lender has the legal right to issue what is called a Statement of Claim to take possession of the property
4. Lender Can Take Possession of the Property- After sending a statement of claim the lender is now in the position to take possession of the property and take legal steps to evict by asking the court for a Writ of Possession. The current owners will be sent an eviction notice and asked to evict the property at a specified date. The homeowners can only be removed by the sheriff- not a lawyer or the lender.
5. Take Steps to Sell the Property- After the Writ of Possession is issued and the final eviction notice, then a lender can proceed with the process of taking possession of your property. The writ of possession is ordered by the court.
In the series of steps that a lender must follow in either mechanism used to handle mortgage default one of the final steps, and arguably one of the most important steps, is to take possession of the property and then sell it in the condition that it is currently in.
An Ontario homeowner in mortgage arrears can not be forced to leave their property and have the lender sell it until all steps are followed. One of the final steps in the power of sale process is the writ of possession obtained by the court enabling the lender to take possession and sell the property. An eviction letter will be sent at this later stage of the foreclosure and power of sale process.
In the foreclosure process, a writ of execution is needed. In the event of a power of sale on an Ontario property, a writ of possession must be obtained to legally sell the property as the property remains under the name of the homeowner. There is no change in the title.
In the foreclosure process, the title is reverting to the lender. To legally sell the property a writ of execution must be obtained which entitles the lender to take possession and sell the property and the title can change hands.
A writ of execution is a court order sent to a sheriff to enforce a judgment made by the courts. The writ of execution legally allows your lender to take possession of your property and sell it.
The writ of execution must be obtained by a lender to legally take possession of a property, sell the property and force the homeowner to leave the property during a foreclosure. It is important to note that a lender or a real estate lawyer can not physically remove an Ontario homeowner from their property. This duty is performed by a sheriff after he/she has been sent the writ of execution from the court.
Falling into arrears and not bringing your mortgage into good standing can lead to a writ of execution or writ of possession due to mortgage default. However, any individual that has a court judgment against them due to outstanding debt can also be faced with a writ. A debt that is left unaddressed can ultimately lead to a writ that entitles a sheriff in the jurisdiction the individual resides in to seize or freeze assets.
The important point to keep in mind is that a writ is only enforceable if the property is in the jurisdiction that the writ is filed. For example, if a writ is filed with the sheriff of the region of York and the property in question is in the city of Hamilton, the writ will not be enforceable. The writ must, in this case, be filed with the Sheriff in the city of Hamilton.
Writs can be filed once a judgment has been made in small claims court concerning unaddressed debt for other circumstances not related to mortgage default. In some instances, there may be a judgment against a parent who owes support payments. If the paying parent does not defend the judgment then a writ can be filed with the Sheriff’s office in the jurisdiction that the parent resides.
Unpaid debts can also lead to a writ filed if the debt is ignored. A default judgment will be awarded which entitles the creditor to file a writ with the Sheriff of the corresponding jurisdiction.
Mortgage Broker Store has expert knowledge about the power of sale and foreclosure process. We are here to help you explore your options to stop losing possession of your home. Every step should be taken to try to avoid a foreclosure or power of sale. Options are available to an Ontario homeowners mortgage in good standing
If you are facing imminent power of sale or foreclosure on your property we can connect with you a network of private lenders who will be able to offer mortgage solutions to help hold on to your beloved home. Don’t hesitate to contact us at your convenience to answer any concerns you may have.
jonathan February 22nd, 2021
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