People use "power of sale" and "foreclosure" like they mean the same thing. In Ontario, they don't. Almost every distressed home you see listed here is a power of sale, not a foreclosure. The difference changes who owns the home during the process, who keeps any leftover money, and what you're walking into as a buyer.
Looking at a power of sale home right now? Send me the listing and I'll walk you through the risks and the math.
The Short Answer
- Power of sale: the lender sells the home to recover what it's owed. The owner still holds title until the sale closes. Any money left over goes back to the owner.
- Foreclosure: the lender goes to court and takes ownership of the home outright. The owner loses the home and any equity in it.
Power of sale is faster and cheaper for lenders, so it's what they almost always use in Ontario. Foreclosure is rare here.
How Power of Sale Works in Ontario
Power of sale is set out in Ontario's Mortgages Act. Here's the usual path:
- Default. The owner misses mortgage payments. The lender can start the process once the mortgage has been in default for at least 15 days.
- Notice of Sale. The lender serves a Notice of Sale under Mortgage on the owner and anyone else with an interest in the property.
- Redemption period. The owner gets at least 35 days to catch up. If they pay what's owed plus costs, the sale stops.
- Listing and sale. If the owner can't pay, the lender takes possession and lists the home, usually on MLS.
- Distribution. Sale money pays the lender's costs and debt first, then any other mortgages or liens. Anything left goes to the former owner.
The lender has to act in good faith and take reasonable steps to get fair market value. That's why most power of sale homes get appraised and listed on MLS instead of sold quietly.
How Foreclosure Is Different
Foreclosure goes through the courts. The lender asks a judge for ownership of the property. If it's granted, the lender owns the home and keeps any profit when it resells. The owner's equity is gone.
Because it takes longer and costs more, lenders in Ontario rarely use it. You'll hear the word "foreclosure" a lot on U.S. TV. In Brampton and the rest of Peel, you'll mostly see power of sale.
Side by Side
| Power of sale | Foreclosure | |
|---|---|---|
| Goes to court? | No | Yes |
| Who owns the home during the process? | The owner | Moves to the lender |
| Leftover money | Goes to the owner | Kept by the lender |
| Speed | Faster | Slower |
| How common in Ontario | Very common | Rare |
What This Means If You're Buying
A power of sale home can be a real opportunity. It can also surprise you. Four things to know before you write an offer:
1. It's sold "as is"
The lender has never lived there. They won't tell you what's broken, and they won't fix it. Expect a schedule in the agreement that says the lender makes no promises about the home's condition.
2. Get an inspection if you can
Access can be limited, but push for a home inspection. Vacant homes can hide frozen pipes, missing fixtures or water damage. A few hundred dollars now can save you thousands later.
3. The price isn't automatically a steal
The lender must aim for fair market value, and many power of sale homes get multiple offers. Compare the price with recent sales on the same street before you get excited. The real deal is often in homes that need work other buyers won't take on.
4. Timing can shift
Closing dates can be less flexible, and there's paperwork your lawyer needs to review carefully. Title insurance is strongly recommended. Have a real estate lawyer who's handled power of sale files before.
Frequently Asked Questions
Is foreclosure common in Ontario?
No. Most Ontario lenders use power of sale because it's faster and doesn't require court. Foreclosure happens but is rare.
Can the owner stop a power of sale?
Yes. During the redemption period in the Notice of Sale, the owner can stop the sale by paying the arrears and the lender's costs. Talk to your lawyer about how this can affect a deal in progress.
Are power of sale homes cheaper?
Not always. Lenders must try to get fair market value, and many are listed on MLS at market prices. The opportunity is usually in condition, speed or timing, not a guaranteed discount.
Where can I find power of sale listings in Brampton and Peel?
Most are listed on MLS, but they're hard to filter for. We track power of sale and estate sale listings across the GTA and send them to buyers who ask.
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If you want to see power of sale and estate sale homes in Brampton, Mississauga and Caledon as they come up, tell me your budget and area. I'll send you the ones worth a look, with the comps, so you can decide on your own.
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This article is general information about the power of sale process in Ontario and is not legal advice. Speak with a real estate lawyer about any specific property or situation. Team Platinum, Royal LePage Platinum Realty, Brokerage.
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