Canada: Mortgage Enforcement Series Bulletin II – Remedies

Last Updated: August 7 2008
Article by BLG's Commercial Real Estate Law Group

Most Read Contributor in Canada, November 2017


Last month we sent out the first bulletin in our mortgage enforcement series, which dealt with the issuance of demand letters and notices. This second bulletin deals with the types of remedies that are available to a lender in Ontario when there has been a default under the mortgage that has not been satisfactorily resolved following notice by the lender, as discussed in the first bulletin. Where market liquidity exists, the market is non-depressed and realizable values are achievable, the power of sale proceeding is often the remedy of choice as the most time efficient and cost-effective method to obtain value for the lender. However, each enforcement situation is unique and it is essential to choose the remedy or remedies that best suit the facts and circumstances of each situation.

Creating a strategy to determine the right type of remedy will depend on the facts of the situation, the legal and practical differences between available remedies, and factors such as the existence of collateral security and guarantors, prior encumbrances, outstanding municipal taxes, the solvency of the borrower, the physical condition of the property, and market trends and values. (Please note that these bulletins are drafted from an Ontario law perspective. We would be pleased to discuss any mortgage enforcement questions you might have for the other Canadian provinces).


  • In an action for foreclosure, the lender seeks to have the court order that the lender (or its assignee) will be the absolute owner of the mortgaged property, free of the interest of the borrower and all subsequent encumbrancers.

  • If obtained, the ownership established by the court order will ultimately replace the borrower's liability to repay the debt.

  • Ultimately, a successful foreclosure remedy results in the lender (or its assignee) taking ownership of the property and extinguishment of the outstanding debt.


  • This is a contractual remedy available to the lender in which the lender is required to follow a strict procedure for the issuance of notices and in which the lender is ultimately entitled to sell the property to a third party.

  • The third and fourth bulletins in this series will discuss the power of sale process in greater detail.


  • The lender can commence an action for sale in which the court regulates the sale and directs the payment of the proceeds of sale.

  • The judicial scrutiny of the sale helps to insulate the lender from procedural and substantive liability, but comes at a higher cost in terms of time delay and procedural expense.

  • A successful judicial sale has the same effect as a private power of sale.


  • The lender can commence an action for payment of the arrears and seek judgment against the borrower (and others liable).

  • This may be strategic where the prospects for recovery are good without the need to resort to security, where a closed mortgage interest rate is above market and the lender does not wish to provide the borrower with the opportunity to redeem, or where there are problematic issues related to the property or the security.

  • A successful action for arrears will result in the recovery of all or a portion of the debt and will not directly involve the property or other security.


  • This is an action for payment on the contractual covenant contained in the mortgage when a default occurs under the mortgage.

  • This action may be commenced concurrently in conjunction with a power of sale proceeding.

  • A successful action on the covenant will result in the lender recovering a greater proportion of its outstanding debt (particularly where it is clear that the value of the property is insufficient to satisfy the amount of such outstanding debt if power of sale is the only remedy used).


  • Where the lender cannot obtain possession of the mortgaged property (e.g. uncooperative borrower), the lender must commence an action for possession.

  • The lender may feel it is necessary to obtain vacant possession of the mortgaged lands because the state of maintenance and repair, insurance coverage or building security may not be satisfactory to the lender.

  • A lender in possession is potentially exposed to environmental liability and other risks associated with possession of the property.

  • A successful action for possession allows the lender to deal with the property directly when there are concerns that the property is not being appropriately preserved and protected or cannot be delivered to a purchaser.


  • With income producing properties, the lender will likely wish to serve notice to tenants to pay all future rents to the lender.

  • Priority issues between the tenants (e.g., rent deposits) and the lender will become relevant in these situations and will need to be reviewed on a case-by-case basis.

  • A successful and timely notice to pay rents will ensure that rents can be credited to the indebtedness.


  • The lender may wish to hire an independent manager for the property. This can be achieved either by way of private appointment or by court appointment.

  • Usually, this occurs when the property involves a going concern and the lender wishes to prevent the borrower from dealing directly with the property and other security following default.

  • A privately appointed receiver is in a similar situation to that of a mortgagee-in-possession in that, if the receiver has assumed management and control of the mortgaged property, the receiver may be exposed to environmental liability for contamination of the property both before, and after, the appointment as well as other risks associated with possession of the mortgaged property.

  • A court appointed receiver has a duty to comply with various legal obligations, including environmental law.

  • There are several reasons that a creditor might choose a court appointed receiver including the fact that many purchasers of multi-residential and commercial properties are now requiring that title to assets be provided through a court-issued vesting order.

  • The lender should keep in mind that court appointed receivers are responsible to the court, whereas a privately appointed receiver has a principal duty of care to its appointing creditor.


Once the lender is aware of the various available remedies, it is necessary to create a strategy that will consider the pros and cons of each remedy, whether multiple remedies should be considered and when the remedies should be pursued throughout the process.

Multiple Remedies

  • Foreclosure and power of sale remedies are mutually exclusive while the ancillary remedies can be used in conjunction with either an action for foreclosure or a power of sale proceeding.

  • BLG can assist you in developing a well planned strategy which exercises some or all of the ancillary remedies prior to commencing the power of sale or foreclosure proceedings in order to avoid being prevented from doing so during the redemption period.

Keeping a Closed Mortgage Closed

  • Consider commencing an action for possession or on the covenant for arrears where it appears that the borrower is deliberately defaulting under the mortgage so as to induce the lender to issue a notice of sale.

  • Conversely, the issuance of the notice of sale under the power of sale proceedings will open the mortgage for full redemption.

Control of the Mortgaged Property

  • The mortgage security may give the lender the right to have the property inspected for environmental issues prior to taking possession.

  • Under the Environmental Protection Act, lenders are entitled to conduct site investigations, secure and provide services to the property and take preventative measures without attracting liability for an order under the Environmental Protection Act.

  • Consider the different implications of taking control of the property either by way of a lender in possession acting through an agent or the appointment of a receiver-manager. Not only will environmental liability be an issue, but arrears of accounts (e.g. taxes and utilities) and service contracts will need to be reviewed.


  • Be aware of the timing constraints associated with each remedy.

  • A lender who takes too long in providing notice / implementing remedies can be attacked for not taking reasonable steps to mitigate its damages by failing to take timely and reasonable action.

BLG Commercial Real Estate Group

Our Commercial Real Estate Group consists of more than 50 experts across the country in all facets of commercial real estate law. We provide excellent creative legal advice to a broad spectrum of clients including developers, builders, pension funds, private financiers, lending institutions, private, public and crown corporations, national and international business communities, including aerospace and airlines, banking and finance, securities, manufacturing, construction, insurance, government agencies, natural resources, high technology, retail, transportation and real estate.

Our services include:

Acquisition and Development

Negotiation and preparation of all documentation relating to the acquisition, development, construction, financing and marketing of commercial, industrial and residential properties, including:

  • Retail plazas

  • Condominium projects

  • Hotels

  • Mixed-use developments

  • Office buildings

  • Residential subdivisions

  • Business parks

  • Shopping centres

  • Apartment buildings

Public/Private Arrangements

Negotiation of arrangements between private enterprise and governmental bodies relating to land and infrastructure development. Formulation and preparation of proposal calls for public/crown corporations and all ancillary agreements.

Construction and Infrastructure

Negotiation and preparation of construction contracts. Negotiation, structuring and financing of infrastructure projects.

Financing and Restructurings

Mortgage enforcement and preparation of all notices and court documents on behalf of lenders. Negotiation and preparation of all financing documentation on behalf of private and institutional lenders and borrowers, for project and term financing. Negotiation of arrangements between investors and developers pertaining to the restructuring of financial affairs, including attending to all due diligence matters.


Negotiation and preparation of all documentation relating to the acquisition, development, construction and financing of hotels, including advising with respect to all related issues including, hotel management agreements, licensing agreements, employment issues, co-owner arrangements, liquor licensing agreements and franchise agreements.


Performance of due diligence reviews and advising on compliance with laws and regulations, advising on obtaining required authorizations and licences and on co-ordinating environmental audits and clean-ups. Negotiation of environmental representations and warranties, advising on the management and disposal of contaminants and their transport, storage and export, and providing representation before administrative tribunals, the civil courts and in governmental inquiries related to these matters.


Advise and assist on all aspects of zoning and planning work, including securing approval of amendments to zoning, advising on expropriation and permitted land uses and the appeal of realty tax assessments. In Québec this includes representation before the Tribunal Administratif du Québec to contest municipal valuation assessments of major hotel, office, commercial and industrial properties.

Long Term Ground Lease

Negotiation and preparation of long-term ground leasing arrangements for both public and private sectors.

Commercial Leasing

Negotiation and preparation of all leasing documentation for retail centres, business parks, office buildings and warehouses.


Structuring, assistance, negotiation and preparation of all condominium documentation, including project financing documentation, declaration, by-laws and rules, disclosure statement, development agreements and sales agreements.


Negotiation and preparation of all documentation required to form real estate syndicates and partnerships, as well as co-tenancy and joint venture arrangements for developers.

Limited Partnerships

Negotiation and preparation of all required documentation and advising with respect to the entering into and the structuring of limited partnerships.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions