If you want to stop a power of sale or foreclosure in Toronto, you’ll need to understand your legal options when it comes to these types of proceedings. The Toronto staff members of Mortgage Broker Store have many years of experience stopping foreclosures and power of sale, and can help you explore options and choose the most beneficial path for your unique situation.
Toronto is the largest city in Canada, and the capital of the province of Ontario. Toronto’s current population is over 2.9 million, making it the fourth most densely populated city in North America. The surrounding cities, collectively known as the Greater Toronto Area or GTA, have a population of over 6 million people. Toronto is one of the world’s most ethnically diverse cities, with about 50 percent of residents being born outside the country. In January 2015, The Economist magazine called Toronto the most liveable city in the world, based on quality-of-life factors including safety, availability of goods and services, and effectiveness of infrastructure. According to census data the average annual income for a Toronto family in 2019 was $71,631.The Toronto District School Board (TDSB) is Canada’s largest school board with approximately 600 schools and over 250,000 current students.
Power of sale is a clause that applies to all mortgages as per the Ontario Mortgages Act, giving the mortgage lender the right to sell the property in order to recoup their investment.
A mortgage is a major investment on the part of your lender, and your mortgage contract is a binding agreement that you will pay back the mortgage in full, plus interest. If you fail to make a mortgage payment when it’s due, then you’re considered in default. Technically, a mortgage lender has the right to invoke power of sale if a mortgage has been in default for more than 15 days. This may not happen, however, since power of sale is a lengthy legal proceeding and in many cases it’s more cost effective for the lender to wait for the borrower to catch up on a single missed payment, or in some cases, work out a deferral plan.
The power of sale process in Ontario generally follows a consistent set of steps.
If at least 15 days have passed since the last missed payment and the lender is unable to work out an alternative with the borrower, the lender must begin the process by mailing a Notice of Sale Under Mortgage to the homeowner.
Once the notice of sale is sent, the homeowner has about 35 days to pay off the listed fees in full. If the borrower is unable to do so by the end of the redemption period, another document called a statement of claim is issued. The statement of claim outlines all the costs and fees required to settle the mortgage, including mortgage fees, land taxes due, lawyer fees, and any additional fees, including some that are unique to Toronto. If the borrower is unable to pay the amounts cited in the statement of claim, the lender can then apply for, and issue, a writ of possession and request an eviction.
A key difference between power of sale and foreclosure is that in a power of sale, the lender can sell your home to get back their investment, but they do not take title to the property. After the home is sold in a power of sale, the property owner is entitled to any excess money left over after the entire mortgage has been paid off. After accounting for legal and other related fees, however, this usually isn’t very much.
In a foreclosure, the lender can take title to the property and therefore becomes the property owner, meaning the original mortgage borrower loses all their home equity.
A Notice of Sale Under Mortgage (usually just called a Notice of Sale) is a document sent by a lender to the mortgage holder when the lender decides to invoke power of sale. A notice of sale can be sent a minimum of 15 days after the mortgage goes into default (i.e. 15 days after the first missed mortgage payment), and is sent to anyone with an interest in the property, including all mortgage holders and any other lenders with a current stake, such as in the case of a property with a second mortgage or a refinanced mortgage.
The content of a notice of sale document is governed by the Ontario Mortgages Act. There may be slight variations in wording, but the document typically always contains a formal statement that the mortgage is in default, an explanation of the amounts owed, and a date by which the outstanding amounts must be paid in order to stop further action.
After the notice of sale is sent, the lender who issued the notice is legally required to wait at least 35 days (or 40 days if the home is occupied by a married couple) before continuing the process by filing for a Writ of Possession. This period is known as the redemption period.
It’s important to stay up to date with your mortgage payments, but sometimes unforeseeable circumstances prevent this. If you think you there’s a chance you may miss your next mortgage payment, it’s important to talk to your lender as soon as possible to see what options are available to you. It’s more than likely that your lender will be willing and able to help you keep your mortgage in good standing during a financial rough patch.
If you are facing foreclosure or power of sale — if your lender has already served a notice of sale or a statement of claim — your best option is bringing your mortgage back into good standing by paying off all that you owe. Of course, if you’re already struggling to make payments, suddenly paying off a larger chunk of money might seem impossible.
To access the funds required to keep your mortgage, you might talk to a private lender about getting a second mortgage and using it to pay off the entire outstanding amount of your original mortgage. Keep in mind that you will still need to pay off the entire second mortgage.
Selling your home before the lender can complete the power of sale process is another option. This is generally considered a last resort, as you still end up losing your home, but opting to sell the home yourself puts you in control of the terms of sale and paying off the claim amount, and it can give you extra time to work out alternative living arrangements.
You don’t have to make the decision alone. If your lender is foreclosing or selling your home in Toronto, Mortgage Broker Store staff can help you review your options.
The most important factor to consider is how much equity is left in your home. If you have a lot of available equity in your home, it’s in your best interest to do everything you can to stop the power of sale or foreclosure. On the other hand, if the value of your debts exceed the property’s value, there is nothing to be gained from stopping the foreclosure or power of sale.
Most people fall somewhere in the middle of the equity range.
If you’re in the market for Toronto real estate, a power of sale home might sound attractive. Power of sale homes can sometimes be cheaper, but it’s also important to be wary of deals that seem too good to be true.
Finding homes under power of sale or foreclosure can be difficult, as there is no general database for this, and sellers are not required to disclose the power of sale or foreclosure status of a property. Power of sale or foreclosure real estate can be a great deal, but it’s also easy to lose money on such a sale if you’re not fully aware of the laws governing the type of property you’re interested in. The legal costs and fees related to buying and selling a power of sale or foreclosure home are typically quite high and are often unpredictable. Common clauses in power of sale agreements — such as “as-is” sales requirements, or legal actions preventing thorough pre-purchase home inspections — can catch hopeful buyers off guard. As such, it’s a good plan to consult a lawyer before agreeing to purchase a power of sale or foreclosure property.
The specialists at Mortgage Broker Store can help by offering advice on how to avoid potential legal pitfalls. We can also provide you with inside information on recent listings for power of sale and foreclosure properties. If you’re looking to buy a power of sale home, our expert team can help you get the best price — and if you’re selling your home as a last resort, we can help you get the most money for the property before your lender takes over the sale.