Under a power of sale, the lender sells the home on the open market, pays off the mortgage and costs, and must account for any money left over, which goes to later creditors and then to the owner. Under foreclosure, the lender asks the court to transfer ownership of the home to the lender. In Ontario, power of sale is far more common because it is usually faster and less costly.
- Your fee in writing within one business day
- Reports 1–2 business days after the home visit
- Signed by an appraiser designated by the Appraisal Institute of Canada
- Past dates are fine, even years later
In this article
What is a power of sale?
Most Ontario mortgages include a power of sale clause. If the borrower defaults, the lender can sell the property without first going to court, as long as it follows the notice rules in Part III of Ontario's Mortgages Act. The owner keeps title until the sale closes.
The lender doesn't keep the home. It sells it, usually by listing it on the open market, and uses the money to pay what it is owed. Anything left over has to be paid out in the order the Act sets, and the last in line is the owner.
What is foreclosure?
Foreclosure is a court process. The lender starts a lawsuit asking the court to end the owner's right to pay off the mortgage and to transfer ownership of the property to the lender. If the court grants it, the lender becomes the owner, and the original owner loses the home and any equity in it.
Because it goes through the court, foreclosure usually takes longer and costs more. It is rare for homes in Ontario, which is why most people who hear "foreclosure" here are really dealing with a power of sale.
The key differences
| Power of sale | Foreclosure | |
|---|---|---|
| What happens to the home | The lender sells it on the open market | The court transfers ownership to the lender |
| Court needed? | No, when the mortgage has a power of sale clause | Yes |
| Money left over | Goes to later creditors, then the owner | The owner generally loses the equity |
| Speed and cost | Usually faster and less costly | Usually slower and more costly |
| How common in Ontario | The usual route | Rare for homes |
Facing a power of sale?
Your fee in writing within one business day, and most reports are ready 1–2 business days after the home visit.
Request a QuoteWhy power of sale is the usual route in Ontario
For lenders, a power of sale is quicker and less expensive because it doesn't need a court order. The lender gives written notice, waits out the time periods in the Mortgages Act, and can then sell.
For owners, it has one important feature: if the home sells for more than what is owed, the extra money doesn't stay with the lender. Section 27 of the Act sets the order the sale money is paid out:
- The costs of the sale
- Interest and costs owing under the mortgage
- The principal of the mortgage
- Later mortgages and other registered creditors, in order of priority
- Any rent deposits owed to tenants
- Whatever is left, to the owner
If the sale doesn't cover the debt, the lender can claim the shortfall from the borrower.
What both mean for the home's value
In a power of sale, the lender controls the sale but must take reasonable care to get fair market value. A price that is too low hurts the owner twice: it can increase the shortfall the lender claims, or shrink the surplus the owner receives. That is why lenders usually get one or more independent appraisals before setting the list price, and keep them on file in case the price is questioned. Read more in how a home is valued in a power of sale.
When a court is involved, as in a foreclosure or a court-supervised sale, an independent appraisal helps the parties and the court assess what the property is worth.
Can the owner stop either process?
Often, yes, if they act early. Under a power of sale, section 22 of the Mortgages Act lets the owner put the mortgage back in good standing at any time before the sale, by paying the missed amounts and the lender's necessary expenses, not the whole balance that came due only because of the default. Owners also refinance with another lender or sell the home themselves before the lender does.
The time limits matter, so speak with a lawyer as soon as you receive a notice. Our guide to the power of sale timeline and your options walks through each step.
Quick answers
What is the difference between power of sale and foreclosure in Ontario?
Under a power of sale, the lender sells the home on the open market, pays off the mortgage and costs, and must account for any money left over. Under foreclosure, the lender asks the court to transfer ownership of the home to the lender. In Ontario, power of sale is far more common because it is usually faster and less costly.
Does a power of sale need a court order in Ontario?
Usually not. Most Ontario mortgages include a power of sale clause, and the lender follows the notice rules in Part III of the Mortgages Act instead of going to court. Foreclosure, by contrast, is always a court process.
Does the owner get any money from a power of sale?
Yes, if the home sells for more than what is owed. Section 27 of Ontario's Mortgages Act sets the order: the costs of the sale, then interest, costs and principal under the mortgage, then later mortgages and other creditors, and the rest is paid to the owner.
Why does the home's value matter in a power of sale?
The lender must take reasonable care to get fair market value. A price that is too low can leave the owner with a bigger shortfall or a smaller surplus, so lenders usually get one or more independent appraisals before listing, and owners sometimes order their own.
Official sources
- Mortgages Act (Part III, Power of Sale), Ontario e-Laws
What happens next
- Request a quote. Tell us the address and why you need the appraisal.
- Get your fee in writing. Within one business day. Nothing is booked until you accept it.
- Home visit and report. We book a time that works for both of us, Monday to Saturday. Most reports are ready 1–2 business days after the visit.
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This article is general information, not legal or financial advice. Please speak with a lawyer about your mortgage and your situation.