To stop a power of sale or foreclosure in Toronto, the property owner will need to address the concerns of the lender that started legal proceedings. Typically, lenders will use these legal actions once a borrower fails to pay their mortgage. To stop legal proceedings, the borrower must work with their lender to address their concerns. It is very important that the property owner act quickly. We recommend that you contact us to discuss your options.
Two legal remedies are available to lenders in Toronto when a borrower is in default of a house mortgage. One legal remedy is the foreclosure process, and the other is the power of sale process. Most lenders in Toronto use the power of sale because it is faster and cheaper.
Lenders can send the borrower a notice of default when the loan is at least 15 days in default. If the default is not corrected, the borrower will receive a statement of claim outlining the terms and costs. As the property owner, it is usually in your best interest to bring the mortgage into good standing and stop the legal process. Work with your lender to keep legal costs low. Call our mortgage agents to arrange a loan if alternative financing is required.
Stop Power of Sale in Toronto
In Ontario, the power of sale in Toronto process begins when a person receives a Notice of Sale document. The Notice of Sale will explain exactly how the borrower breached the mortgage agreement and how this can be fixed. Typically, at the beginning, the mortgage can be put back into good standing by paying all the missed payments plus fees. Upon sending the Statement of Claim document, lenders have the right to request payment of the total mortgage amount, including missed payments and fees.
The most common way of paying the lender’s demands is to get a new mortgage. For people with first mortgages in the power of sale, it may be possible to get a second mortgage to pay the amounts demanded by the first mortgage lender. In the case of second mortgages subject to power of sale, the most common resolution involves substituting the existing mortgage with a brand-new one. In the best-case situation, lenders can provide mortgages up to 75% of the property’s value. This maximum loan amount can be lower for rural areas or during economic hardship.
When a house or commercial property undergoes the power of sale process, the lender typically hires a real estate agent to sell it. The goal is to sell the property for the highest price the real estate market will bear. The actual selling price of the property could be higher or lower depending on the property’s condition or the carrying costs of the property. The property owner will have no input on their property’s selling price or marketing.
Foreclosures
Foreclosures are a valid legal option for lenders but are rare in Ontario. A borrower must receive awareness if they face foreclosure upon receiving a Statement of Claim. The Statement of Claim must explicitly state that the process is a foreclosure rather than a power of sale. Foreclosures involve a significant amount of court time and can take years to complete. Many borrowers who face foreclosure are able to petition the court in order to convert the legal action into a power of sale. Foreclosures incur high costs and may lead to the seizure of your property. Considered a harsher remedy than the power of sale, foreclosure enables the lender to seize all of the homeowner’s built-up equity. The original owner will not receive any money from the property.
Buying a Power of Sale or Foreclosure Home in Toronto
There is usually a great demand for properties listed via the power of sale since people assume these properties will sell at a discount. As the owner of a house that is in the power of sale, it is usually in your best interest to sell the house before the lender takes the house. When purchasing a power of sale home, buyers acquire the property in its “AS IS” condition. As the buyer, you assume all risks related to buying the house. We strongly recommend that buyers have a real agent and lawyer who is familiar with the power of sale process; small errors can cost the purchaser tens of thousands of dollars, and while a power of sale home may be a great deal it could have unexpected costs.
Helpful FAQ Post
Can I Stop a Foreclosure or Power of Sale in Toronto?
A foreclosure is a legal remedy a lender uses to recoup their financial investment in a property. A foreclosure means that the lender is taking ownership of your property. The lender will assume all debts, liability and any home equity. If your property has a large amount of equity, you should take immediate action to try and stop the foreclosure.