A strict foreclosure is a type of judicial foreclosure in Canada where the courts grant the lender title to the property instead of simply selling the property. Typically in Canada, a lender will use a power of sale with minimal court involvement. In strict foreclosure the lender will get ownership of the property and will not be obligated to sell the property. Strict foreclosure was the very first type of foreclosure method available to lenders in Canada, but is now rarely used. In provinces that allow power of sale, like Ontario, a power of sale is the preferred remedy for the vast majority of lenders.
Upon receiving the initial power of sale or foreclosure documents, the best thing to do is to contact your mortgage lender and try to work out a solution. Most lenders prefer to avoid using power of sale and foreclosure since it takes up a lot of their time in resources. Many lenders will agree to arrange new payment schedules which will make it easier to keep the mortgage in good standing.
When a lender is not willing to negotiate, and simply demands a payment be made to them. If the homeowner has relieved a Notice of Sale, then the lender can request that all mortgage arrears and other fees to be paid off to bring the mortgage back into good standing. Thirty-five days after the Notice of Sale was issued the lender can issue a Statement of Claim and can demand the entire mortgage amount to be paid off.
In most cases where the lender will not negotiate, the best solution is to seek financing from other lenders. A new lender can provide new financing needed to put the mortgage back into good standing, or will replace the mortgage with a new one. Our team has years of experience in arranging solutions to power of sale situations. Feel free to call or email our team and we will be happy to provide you with free advice on your situation.
