A Notice of Sale is a legal document a lender sends to a borrower defaulting on their mortgage. 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, lenders, and anyone with an interest in the property. Typically, a lawyer sub-searches the title and sends 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 is identified by the title “Notice of Sale under Mortgage” at the top. The Mortgages Act defines the notice’s contents, stating the default, required payments, and payment deadlines. Below is the sample document from the Ontario government.
This Sample Notice of Sale Under Mortgage Document is Copyright of the Queen’s Printer for Ontario
What Happens After?
After sending the Notice of Sale, the lender must wait 35 days, or 40 if a married couple occupies the property, before proceeding with the Power of Sale. These 35 to 40 days are known as the redemption period, and the lender must accept payment of the items listed in the Notice of Sale during this time period. Once paid, the mortgage returns to good standing and operations resume normally. If the mortgage goes unpaid, the lender may file for a Writ of Possession, enabling them to evict homeowners. After the redemption period, the lender can demand payment of the entire mortgage, not just the Notice of Sale amount. 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.
During Power of Sale, the lender charges legal and administrative fees to the mortgage, reducing the homeowner’s equity.
Contact the mortgage lender immediately upon receiving it. 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 arrange to sell the property.
Important Legal Notice
This page provides general information; it doesn’t cover every detail 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 is available for a free consultation by calling 416-499-2122 or emailing ron@powerofsalesontario.ca
