RECO To Shut Down All 17 iPro Brokerage Locations By Tuesday

Power of Sale

Learn how power of sale works in Canadian real estate, how it differs from foreclosure, and what borrowers and investors need to know about the process.

Power of Sale

May 22, 2025


What is Power of Sale?

Power of sale is a legal process used by lenders in several Canadian provinces to recover mortgage debt by selling a defaulting borrower’s property without going through the court system.

Why Power of Sale Matters in Real Estate

Common in Ontario and Nova Scotia, power of sale allows lenders to act more quickly than foreclosure. Once a borrower is in default, the lender can issue notice and, after a waiting period, sell the home to recover the debt.

Key features of power of sale:
  • Property is sold by the lender, not the court
  • Borrower may still owe any shortfall after the sale
  • Any surplus funds after debt and costs are paid go to the borrower

This process protects lender rights while offering transparency and oversight. Homeowners in power of sale should seek legal counsel promptly.

Understanding power of sale helps homeowners, investors, and agents navigate distressed property sales and lender recovery procedures.

Example of Power of Sale in Action

After a borrower defaults, their lender exercises power of sale, selling the property to recover the remaining loan balance and legal fees.

Key Takeaways

  • Enables lender to sell defaulted property.
  • Faster and less costly than foreclosure.
  • Common in Ontario and Nova Scotia.
  • Borrower may retain surplus after sale.
  • Governed by provincial statutes.

Related Terms

  • Foreclosure
  • Default
  • Mortgage Arrears
  • Distressed Property
  • Judicial Sale

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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