Canada: Mortgage Enforcement Series Bulletin III - Foreclosure v. Power Of Sale

Last Updated: September 4 2008
Article by Sybil Johnson-Abbott

Most Read Contributor in Canada, September 2016


Last month, our second bulletin dealt 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. Some of these remedies can be used in conjunction with others, but this bulletin of the mortgage enforcement series takes a closer look at the advantages and disadvantages of the two mutually exclusive remedies - foreclosure and power of sale. Foreclosure and power of sale are two very different remedies that have some important legal and practical differences between them. (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.)





Power of Sale

  • Quick and relatively inexpensive

  • Convenience – can be done from a solicitor's office without court supervision

  • Service can be effected by registered mail

  • The redemption period is fixed with no provision for extension by the mortgagor

  • A sale made in good faith is not likely to be reopened or set aside

  • The right to pursue a deficiency after the sale is preserved

  • A mortgagee can abandon the power of sale and commence an action for foreclosure without consent
  • The mortgagee must bear the responsibility of the proceedings

  • The mortgagee has the onus to account for the propriety of the sale and the surplus and could be exposed to attack on the proceedings after the event

  • Risk that no satisfactory sale can be made. Need a suitable market for sale.

  • The mortgagee has no power to refinance or make capital improvements to increase the marketability of the mortgaged premises

  • There are limitations imposed on the mortgagee during the redemption period


  • The mortgagee is normally shielded from any action by the mortgagor for impropriety in the sale of the property

  • The court can provide one judicial forum to settle complex issues such as priorities, accounts, just allowances, costs and prior encumbrances in one proceeding

  • The mortgagee can make capital improvements or refinance without the need to justify to the mortgagor

  • The mortgagee will secure any increased value or enjoyment of the property and does not need to account to the mortgagor for any profit on resale

  • There are no limitations on the mortgagee from taking any other action during the 60 day redemption period if same is requested by the mortgagor

  • Personal service is required

  • Determinations must be made on whether the property is a matrimonial home

  • Can be a time consuming process (mortgagor can request a 60 day redemption period from the taking of accounts)

  • Inconvenience of a court procedure

  • Provides the mortgagor with an ability to challenge and protract the action

  • Upon the sale of the property, the debt is extinguished and any deficiency cannot be pursued as against the mortgagor or guarantor either on the covenant or collateral security

  • Land transfer tax is payable on the registration of the final order of foreclosure

  • The mortgagee is subject to the intervention of the court on equitable grounds


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.

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The Borden Ladner Gervais LLP Commercial Real Estate Law Alert is necessarily of a general nature and cannot be regarded as legal advice. The firm would be pleased to provide additional details and to discuss the possible effects of these matters in specific situations. Lawyers " Patent & Trademark

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