If you’re a homeowner in Ontario, falling behind on mortgage payments can be overwhelming. One term you may come across during this time is Power of Sale. But what does it actually mean and what can you do to avoid it?

Whether you’re trying to protect your home or exploring properties being sold under Power of Sale, this guide outlines everything you need to know. We’ll explain the Power of Sale meaning, how it works in Ontario, how it differs from foreclosure, and what to keep in mind when buying or selling a property through this process.

What Does Power of Sale Mean?

Power of Sale is a legal remedy available to lenders when a borrower defaults on their mortgage. Instead of going through the courts, the lender is permitted to sell the property in order to recover the debt. This option is included in most standard mortgage agreements in Ontario and is used far more often than foreclosure.

When a Power of Sale occurs, the lender sells the home and uses the proceeds to cover the outstanding mortgage balance, legal costs, and any related fees. If there’s money left over after those debts are paid, the remaining funds are returned to the homeowner.

How Does Power of Sale Work in Ontario?

In Ontario, the Power of Sale process typically follows these steps:

1. Default: The borrower misses one or more mortgage payments, usually by more than 15 days.
2. Notice of Sale: The lender issues a formal notice, giving the borrower at least 35 days to pay the overdue amount, plus any accrued interest and legal fees.
3. Redemption Period: During this window, the homeowner can bring the mortgage back into good standing.
4. Listing the Property: If the debt isn’t resolved, the lender hires a REALTOR® to list the property for sale at fair market value.
5. Distribution of Funds: The sale proceeds go toward the mortgage and associated costs, with any surplus returned to the homeowner.

Power of Sale vs Foreclosure: What’s the Difference?

While both Power of Sale and foreclosure involve selling a home after default, there are key differences.

Legal Process and Ownership

Power of Sale allows the lender to sell the property without taking ownership and without court involvement. It’s generally faster and less expensive. Foreclosure, by contrast, involves a legal proceeding where the lender becomes the registered owner of the property.

Sale Proceeds

In a Power of Sale, any funds left after the mortgage and legal fees are paid go back to the homeowner. With foreclosure, the lender keeps all proceeds from the sale—even if they exceed what was owed.

Use in Ontario

Power of Sale is the standard approach in Ontario and is outlined in most mortgage contracts. Foreclosure is rare and typically only used in complex or contested cases.

Searching for more general home selling advice? Check out these related blogs for more selling tips.

• What Not to Fix When Selling a House
• How Soon Can I Sell My Ottawa Home?
• What If My Home Doesn’t Sell?

For Homeowners: Can You Avoid Power of Sale?

Yes—and the earlier you take action, the more options you have. If you’re falling behind on payments or anticipating financial strain, consider the following steps:

Talk to Your Lender

Many lenders are open to solutions if you’re upfront about your situation. You may be eligible for payment deferrals, refinancing, or modified loan terms.

Seek Professional Advice

A mortgage broker or financial advisor can help you review your options, including debt consolidation or alternative lending solutions.

Consider Selling Before the Lender Acts

Listing your home proactively allows you to control the process and potentially walk away with more equity—rather than waiting for the lender to initiate a sale.

Work with a REALTOR®

An experienced real estate professional can help you price and market your home quickly and strategically, minimizing stress and maximizing results.

For Buyers: How to Buy a Power of Sale House

For buyers and investors, Power of Sale homes can present good value—but also come with additional risks.

Be Pre-Approved

These homes are often priced to sell and can move quickly. Having financing in place puts you in a strong position to make a timely offer.

Use an Experienced REALTOR®

Power of Sale transactions differ from typical sales. A knowledgeable agent can help navigate offer terms, condition clauses, and communication with the lender.

Understand “As-Is” Conditions

Power of Sale properties are sold without warranties or representations. The lender makes no guarantees about the condition of the home, so a thorough home inspection is strongly recommended.

Get Legal Advice

Work with a real estate lawyer to review the purchase agreement. These transactions often include unique clauses that need close attention.

Pros and Cons of Buying a Power of Sale Property

The Advantages

Power of Sale homes are often priced to sell quickly, making them attractive to buyers looking for value. Because lenders are motivated to recover outstanding debts—not maximize profit—buyers may find good deals. Also, with no emotional seller involved, the process can be more straightforward and result in faster closings.

The Drawbacks

However, these properties are sold as-is, with no disclosure obligations on the part of the lender. Buyers assume full responsibility for any issues, including structural problems, water damage, or repairs. Legal and contractual details can be more complex, which is why a lawyer’s review and a home inspection are essential to avoid surprises.

Thinking about buying a home? You may find these blogs helpful!

• Am I Ready to Buy My First Home?
• How to Budget For Your First Year of Homeownership
• What to Know About Buying a New Build Home in Ottawa

How We Can Help You Navigate Power of Sale

Understanding how Power of Sale works in Ontario puts you in a better position to act—whether you’re a homeowner trying to avoid it or a buyer exploring opportunities.

For sellers, the key is not to wait. Open communication with your lender and partnering with a trusted REALTOR® can lead to solutions before legal action is necessary. For buyers, Power of Sale homes can be a smart investment—but they require informed decisions and careful guidance.

At The Wright Team, we support both sides of the process. We help homeowners explore their options and assist buyers in navigating the legal and logistical complexities of Power of Sale purchases. If you’re unsure about your next step, we’re here to help you move forward with confidence.

Ready to reach your real estate goals? Call 613-692-0606 to get in touch, or reach us by email at info@ottawahomes.ca.