Power of Sale in Richmond Hill and Markham: What Homeowners and Buyers Should Know

Power of sale is the process an Ontario lender uses to sell a property after a borrower falls behind on the mortgage. If you are the homeowner, understanding the timeline and your rights matters enormously, because options narrow quickly. If you are a buyer looking at one of these listings, the terms of sale are very different from a normal transaction. This guide covers both sides for Richmond Hill and Markham.

Power of sale process for homeowners and buyers in Richmond Hill and Markham, Ontario

Written by a Richmond Hill and Markham Real Estate Expert

At Kirby Chan & Co. Real Estate Team, we field questions about power of sale from both sides: homeowners who have received a notice and buyers who have spotted one of these listings. We have seen a buyer assume a power of sale listing was automatically a bargain, then discover the lender's schedule stripped out nearly every protection they expected in a standard agreement. If you are dealing with a power of sale in Richmond Hill or Markham, the details matter more than usual.

Quick takeaway: Power of sale lets a lender sell a property after default without taking ownership of it. It is far more common in Ontario than foreclosure. The process runs on statutory timelines, and homeowners generally have a redemption window in which they can bring the mortgage current and stop the sale. If you are behind on payments, act immediately and get legal advice, because selling on your own terms almost always produces a better outcome than letting the process run. For buyers, these properties are typically sold as is with the lender's own schedule replacing many standard protections, and they are not automatically discounted, since the lender has a duty to seek a proper price.

What Power of Sale Is
How It Differs From Foreclosure
How the Process Works
If You Are the Homeowner
Buying a Power of Sale Property
Are They Actually Bargains?
Risks Buyers Should Weigh
Frequently Asked Questions

Dealing With a Power of Sale in Richmond Hill or Markham?

Call Our Dedicated Seller Hotline

416-305-8008

Kirby Chan & Co. Real Estate Team

What Power of Sale Is

The Basics A Lender's Remedy After Default

When a borrower falls behind on mortgage payments or otherwise breaches the mortgage terms, the lender has remedies available under the mortgage and under Ontario law. Power of sale is the one most commonly used. It allows the lender to sell the property and use the proceeds to recover what it is owed, without the lender ever taking ownership of the home.

The homeowner remains the registered owner until the sale closes. The lender is exercising a contractual and statutory right to sell the property, and the process is governed by both the mortgage document and Ontario's mortgage legislation.

How It Differs From Foreclosure

Two Different Remedies, Often Confused

In a foreclosure, the lender goes to court to take title to the property itself. Whatever the home turns out to be worth becomes the lender's, for better or worse. Foreclosure is used far less often in Ontario than power of sale.

In a power of sale, the lender does not take title. It sells the property, recovers the mortgage balance plus its costs, and any surplus that remains generally belongs to the borrower and any subsequent charge holders. The flip side is that if the sale does not cover what is owed, the borrower may remain personally liable for the shortfall. That difference matters a great deal to a homeowner and is worth discussing with a lawyer.

How the Process Works

Timelines are set by statute and by the mortgage, so confirm the specifics with a lawyer.

Stage 1 Default and the Waiting Period

The process begins when the borrower defaults, most often by missing payments. Ontario law requires the lender to wait a set period after the default before it can issue a formal notice. During this early window the borrower can usually resolve the matter simply by bringing the account current. This is by far the easiest point at which to fix the problem, and the point at which most people delay because the letters feel like something to deal with later.

Stage 2 The Notice of Sale and the Redemption Period

The lender then serves a formal Notice of Sale on the borrower and on others with an interest in the property, such as subsequent mortgage holders. That notice starts a redemption period during which the borrower can stop the process by paying what is required, typically the arrears together with the lender's costs, or by paying out the mortgage entirely. This window is limited and defined by statute. If you receive a Notice of Sale, treat it as urgent and get a lawyer involved immediately rather than waiting to see what happens.

Stage 3 The Sale and the Distribution of Proceeds

Once the redemption period has run without the mortgage being brought current, the lender can proceed to sell, usually by listing the property on the open market through a real estate brokerage. A lender exercising power of sale has a duty to act in good faith and take reasonable steps to obtain a proper price for the property. After closing, the proceeds pay the mortgage, the lender's costs and any subsequent registered charges in order of priority, with any surplus going to the borrower.

If You Are the Homeowner

Time Is the Most Valuable Thing You Have

If you have fallen behind or received a notice, the single most useful thing you can do is act quickly and get advice from a real estate or insolvency lawyer. Options are widest at the beginning and narrow at every stage. Waiting almost never improves the situation, and the lender's costs are typically added to what you owe as the process continues.

It is also worth speaking to your lender directly. Lenders are frequently willing to discuss arrangements, since a resolved account is usually better for them than the time and expense of a sale process.

Option Bring the Mortgage Current or Refinance

If you can pay the arrears and costs within the redemption window, the process generally stops. Some homeowners refinance with a new lender to pay out the existing mortgage entirely, though qualifying can be harder once there is a default on record. A mortgage broker who works with a range of lenders can tell you quickly whether this is realistic in your situation.

Option Sell the Home Yourself, on Your Own Terms

If keeping the home is not realistic, selling it yourself before the lender does is usually the better outcome. You control the timing, the preparation and the marketing, the property is presented properly rather than as a distressed listing, and you avoid a further accumulation of the lender's legal and administrative costs. Any equity that remains after the mortgage and costs are paid is yours.

This route requires moving promptly, since it has to be completed within the available window, and your lawyer should be coordinating with the lender throughout. If you are considering it, our complete selling guide covers the process and our commission guide explains what comes off the proceeds at closing.

Behind on Payments and Not Sure What to Do?

Call Our Dedicated Seller Hotline

416-305-8008

No pressure, just a straight answer

Buying a Power of Sale Property

The terms differ from a normal purchase in ways that matter.

The Lender's Schedule Replaces Standard Terms

Lenders selling under power of sale attach their own schedule to the agreement of purchase and sale, and it typically takes precedence over the standard clauses buyers are used to. It commonly removes representations and warranties about the property, its condition, its systems and the chattels. Read that schedule carefully with your lawyer before you sign anything, because it, not the standard form, defines what you are actually getting.

Sold As Is, Where Is

The lender has usually never lived in the property and cannot tell you anything meaningful about it. There is normally no seller property information statement, no history of repairs and no assurance that appliances, furnace, plumbing or roof are in working order. Whatever condition the home is in on closing day is what you take on. A thorough inspection is more valuable here than in almost any other purchase.

Vacant Possession Is Not Always Guaranteed

Someone may still be living in the property, whether the former owner or a tenant. Some lender schedules do not promise vacant possession on closing, which can leave the buyer to deal with the situation afterward. If the property is tenanted, tenancy law continues to apply and a buyer cannot simply remove occupants. Confirm the occupancy position in writing before you commit.

Timelines and Conditions Can Be Tighter

Lenders often want firm offers and shorter condition periods, and may be less flexible on irrevocable dates and closing dates than a typical seller. That puts pressure on financing and inspection conditions. Have your financing arranged and your inspector lined up before you offer, so a short window does not force you to waive protections you should keep.

Are They Actually Bargains?

The Myth Usually Not the Discount People Expect

Many buyers assume a power of sale listing means a deep discount. In practice that is often not the case. A lender exercising power of sale has a duty to take reasonable steps to obtain a proper price for the property, so these homes are generally listed on the open market at prices informed by market value, and they attract competing offers like any other listing.

Where a price difference does exist, it usually reflects something real: deferred maintenance, unknown condition, the absence of warranties or a longer or riskier closing. In other words you may be compensated for taking on risk rather than handed free equity. Evaluate the property against comparable sales the same way you would any other purchase, then decide whether the terms justify the price.

Risks Buyers Should Weigh

Condition and Hidden Costs

A property whose owner was under financial strain may have gone without maintenance for some time. Systems may be at end of life, there may be damage that is not obvious, and utilities are sometimes shut off, which can make a full inspection harder. Budget realistically for repairs and, where you can, have the systems assessed rather than assumed.

Title and Legal Considerations

Your lawyer's title search matters more than usual on these purchases. There may be other registered charges, liens or claims to deal with, and questions can arise about whether the sale process was carried out properly. Title insurance is standard practice and worth discussing specifically in this context. Retain a lawyer experienced with power of sale transactions and involve them before you sign, not after.

Recognition

Kirby Chan Awards and Achievements

🏆 #1 Individual Producer in Ontario for eXp Realty 2023

🏆 Top 3 Best Rated Real Estate Agent in Richmond Hill

🏆 Toronto Star Platinum Award for Best Real Estate Agent

🏆 Top Real Estate Agent Award in Markham

🏆 2X ICON Agent Award with eXp Realty

🏆 2025 Community Votes Platinum Award, Thornhill

🏆 2024 Community Votes Platinum Award, Thornhill

🏆 2025 Gold Award for Real Estate Brokers in Markham

🏆 2024 Community Votes Bronze Award, Richmond Hill

🏆 2023 Community Votes Platinum Award, Thornhill

Frequently Asked Questions

What is the difference between power of sale and foreclosure?

In a foreclosure the lender goes to court to take title to the property. In a power of sale the lender does not take title, it sells the property to recover what it is owed, with any surplus generally going to the borrower. Power of sale is far more common in Ontario.

Can I stop a power of sale on my home?

Often yes, if you act within the redemption period, typically by paying the arrears together with the lender's costs or paying out the mortgage. Options narrow at every stage, so get legal advice immediately rather than waiting.

Do I get any money back if my home is sold under power of sale?

If the sale proceeds exceed the mortgage, the lender's costs and any subsequent registered charges, the surplus generally goes to the borrower. If the proceeds fall short, the borrower may remain liable for the shortfall. Speak with a lawyer about your specific situation.

Are power of sale properties cheaper?

Not automatically. Lenders have a duty to take reasonable steps to obtain a proper price, so these homes are generally marketed openly and can attract competing offers. Any price difference usually reflects condition, unknowns or the absence of warranties.

What should a buyer watch for in a power of sale purchase?

The lender's schedule, which usually removes standard representations and warranties, the as is condition of the property, whether vacant possession is guaranteed, and tighter timelines. Have a lawyer review the agreement before you sign and arrange a thorough inspection.

Who can help me with a power of sale situation in Richmond Hill or Markham?

Kirby Chan and the Kirby Chan & Co. Real Estate Team can advise on the property side, whether that means selling your home on your own terms before the process runs or evaluating a power of sale listing you are considering. Reach me at (416) 305-8008.

Contact Kirby Chan

Dealing With a Power of Sale in Richmond Hill or Markham?

If you have fallen behind, speak with a lawyer first, then let us look at the property side. Selling on your own terms while you still have time usually produces a better result than letting the process run. If you are a buyer considering one of these listings, I can help you assess the property and the terms realistically before you commit.

Book a Consultation

Kirby Chan | Kirby Chan & Co. Real Estate Team
kirby@kirbychanandco.com
https://kirbychanandco.com

Dedicated Seller Hotline

416-305-8008

Note: This guide describes power of sale in general terms. The process is governed by the terms of the individual mortgage and by Ontario legislation, statutory notice periods and requirements apply, and outcomes depend on the facts of each case. Timelines, rights and obligations are not summarized exhaustively here and change over time. Nothing in this guide is legal, tax or financial advice. If you have received a notice from a lender, or are considering purchasing a property being sold under power of sale, consult a lawyer promptly for advice specific to your situation.