Just as parts of Ontario are going once again back into lockdown as experts foresee a third wave of the current pandemic, property values across the Province have never been higher. Home sales in Toronto and the surrounding GTA and likewise through the Province as a whole are hitting records unseen in previous years.
Ontario homeowners are routinely seeing bidding wars on their properties for sale in the robust Ontario real estate market and many homes are selling for significantly more than the original asking price. The Ontario housing market is in the middle of a housing frenzy as many of us are still forced to work reduced hours and limit social activities as well as contact with friends and family.
Royal Bank of Canada forecasts that Toronto and the GTA should expect to see the influx in housing sales and escalation of housing prices continue well into the year. Although the Toronto downtown condo market did take a hit over 2020 with an 8% drop in condo sales as more and more urbanites choose to abandon ship and hit the suburbs and beyond, single detached dwellings continue to sell in high numbers. Along with primary family residences, these single detached dwellings include second properties including cottages for some Ontario homeowners.
What if You are Facing a Power of Sale or Foreclosure on Your Cottage?
If you own a second property such as a vacation or rental cottage, the market conditions are also favorable with second properties increasing in value and selling in high numbers. Despite the current robust housing market, some Ontario homeowners have fallen into arrears with their mortgage payments on their second properties. Once in arrears, a lender will likely inform you by writing that your property is under threat of a power of sale or foreclosure.
Power of Sale and foreclosure are the two methods of dealing with mortgage default are used in Ontario, however, by far the most commonly used method to deal with mortgage arrears is to a power of sale. A foreclosure remains an option for lenders in Ontario but is seldom used because it involves the involvement and authorization of the courts and takes considerably more time to complete.
Regardless of the method of default that a lender chooses to utilize, once the process is underway, an Ontario homeowner is under the threat of losing their valued property. Your cottage may be considered a summer getaway residence or you may own it as an investment property to rent out. Despite the intended purposes of your second property unless you take steps to stop a power of sale or foreclosure on your cottage, your lender will ultimately repossess your property and try to sell it at market value with a discount.
Steps Involved in a Power of Sale and Foreclosure
Even if you have been notified in writing that you are officially in default and the process of the power of sale is underway (officially entitled a Notice of Sale) there still is time to try to stop the power of sale.
An Ontario Cottage owner will be given a redemption period to try to put the mortgage back into good standing (45 days in Ontario). Property owners are legally given this grace period in the hopes that the mortgage that has fallen into arrears is put back into good standing with the lender. In a power of sale and foreclosure, there are legal steps that must be followed by your lender. The difference between the two default methods resides in two major differences:
- In a foreclosure, the lender must get the approval of the courts and must follow the timeline of the courts in obtaining default judgments and Writs of possession to repossess your property in the final stages of the default process
- It takes longer to complete a foreclosure and this is often reason enough for Ontario lenders to opt for a power of sale on a given property once in mortgage arrears.
The steps that you will be facing are:
- Lender Must Allow for 15 days– once a borrower has missed a payment or is substantially late, the Ontario Mortgage Act requires that the lender provide a borrower 15 days to try to rectify the situation before a lender can exercise the power of sale.
- Send a Notice of Sale to Borrower- Once 15 days have passed a lender is now entitled to send a letter. This letter is referred to as a Notice of Sale. The notice of sale letter will specify that the borrower has gone into default and that the borrower has a redemption period to try to rectify the situation by making up any missed payments.
- Lender Will Issue a Statement of Claim- If the borrower does not rectify the financial situation and pay what is due by the end of the redemption period the lender has the legal right to issue what is called a Statement of Claim to address the debt owning and take possession of the property
- Lender Can Take Possession of the Property– After the Statement of Claim has been issued and the borrower has neither paid off the entire mortgage loan plus legal fees nor put the mortgage in good standing, the lender is now in the position to take possession of the property and take legal steps to evict by asking the court for a Writ of Possession. The current owners will be asked to evict the property at a specified date once the Sheriff has filled out the eviction paperwork. The Sheriff will send a Notice of Eviction which will specify the time and date that the homeowners must vacate the property. If they do not leave voluntarily, then they may be forcibly removed by the authorities from the property.
- Take Steps to Sell the Property- It is only at this step of the power of sale proceedings that the lender can legally possess the property and attempt to sell the property in the condition it is currently in. The fees will be the responsibility of the previous owner and can be very substantial. The profit will go to the former homeowner but will be considerably reduced through the enormous costs associated with a power of sale.
Ways to Stop a Power of Sale or Foreclosure on Your Property
You must take any measures available to try to stop your lender from repossessing your property. Mortgage Broker Store is very experienced and knowledgeable about the technicalities of both default methods and ways to try to stop a lender from taking your home:
- Taking out a private mortgage to pay off any arrears owed on your property. Private lenders are readily available to negotiate private second loans to help provide funds to put your principal mortgage back in good standing.
- Selling your house quickly in the state it is currently in. There are buyers in Ontario that will be willing to buy your home in the condition it is in and sell it at market value with a discount. You will not have to invest costs in repairs or renovation as these buyers will buy your property in the current state it is in.
- Renegotiating your principal loan with a private mortgage loan despite ongoing credit problems.– An option available is to take out a short-term mortgage loan to help pay back any legal fees and arrears owing while easing the monthly mortgage payments. Private lenders are available in your area to help negotiate a principle loan that would bridge the gap and prevent a lender from completing the default process on your home.
- Asking a Judge for Dely in the Default proceedings– this is a legal option open to all Ontario homeowners but we do not recommend it due to the substantial cost involved. The legal costs can run up to $30,000.
Mortgage Broker Store Can Direct You in the Process of Power of Sale/Foreclosure on your Cottage
You have worked hard to obtain a cottage for your family to enjoy or to rent out as an investment. Don’t risk losing it. Mortgage Broker Store has specialized knowledge in the power of sale and foreclosure process. We also have access to a network of well-established private lenders in your area to negotiate a private mortgage loan using the existing equity in your property and assessing the Loan to Value (LTV) on your property.
Take the steps to stop your house from being taken back by your lender. We will be able to answer any of your concerns and point you in the right direction- towards keeping your home!
Lenders can use the power of sale process to recover funds from a cottage that is in default. The cottage power sale process has little involvement with the courts. This makes the power sale of cottages in Ontario cheaper than a foreclosure. In Ontario, lenders must wait 15 days before sending the borrower a notice of default. Many lenders wait 90 days before sending a notice of default. As the property owner, you should correct the default quickly since the penalties can be substantial. If possible work with your lender to arrange a new mortgage. If you cannot arrange a new mortgage with your present lender contact one of our mortgage agents.
Free Legal Help and Legal Aid
If you are facing a power of sale of your cottage in Ontario we suggest that you contact a lawyer and a mortgage agent. Our agents can also refer you to lawyers that provide free legal advice.
Give the lawyer and agent information regarding the property, including mortgage papers, property taxes, notices from the lender, statement of claim and any liens. The more information that the lawyer and broker have the faster they can help you. A power sale cottages Ontario can result in your cottage being sold within a very short period of time. Therefore, we recommend that you act quickly to save your house and stop any further legal costs by the lender.
If your home or property may be put up for power of sales, as the property owner you should try to stop the power sale cottages Ontario. Try to reduce any legal costs and ensure that your home sells for its highest market value. In certain cases, the homeowner may be already evicted from the property which makes the situation even more difficult. Lenders will usually sell the house through a real estate agent that has access to a multiple listing service. This will let the largest number of potential buyers know the house is for sale. Lenders will do their best to get the highest price possible for the house although the house may sell for less than fair market value. As the property owner, it is in your best interest to try and stop a power of sale since this could be the best way to reduce legal fees.
Any person that plans to buy, sell or place a mortgage on any real estate or property should have a lawyer. We do not represent this website, mortgage brokers and agents to be a legal opinion. We recommend our clients receive legal advice from a lawyer. The power sale cottages Ontario process can be more complex, therefore having a real estate lawyer familiar with power of sales can save time and money. As the property owner, you can correct the default and bring the mortgage back into good standing, this usually involves paying any outstanding amounts owed. Our mortgage agents can tell you within minutes if you can be approved by a mortgage or power sale cottages Ontario.