A power of sale property in Ontario is a home being sold by a mortgage lender, not the homeowner, after the homeowner defaulted on their mortgage payments. Ontario has around 340 active listings on Condohill that reference a power of sale as of September 2026, and the term shows up often enough in GTA real estate searches that it’s worth understanding clearly — both because these listings can represent genuine value, and because the process differs in real, practical ways from buying a home from a typical seller.
This guide explains what power of sale actually means under Ontario mortgage law, how it’s different from foreclosure, and what to expect as a buyer making an offer on one of these properties.
What Does "Power of Sale" Actually Mean?
Power of sale is a legal remedy available to a mortgage lender in Ontario when a borrower defaults on their mortgage. Rather than going through court-supervised foreclosure, the lender exercises a right written into the mortgage itself — the "power of sale" clause — to sell the property directly and use the proceeds to recover what’s owed on the mortgage. It’s the most common way lenders recover a defaulted mortgage in Ontario, precisely because it’s faster and less costly than foreclosure.
Critically, a power of sale is not the same as the lender owning the property. The homeowner retains legal title until the sale closes, and any proceeds beyond what’s owed on the mortgage, associated legal costs, and other registered claims against the property are returned to the original homeowner.
Power of Sale vs. Foreclosure: What’s the Difference?
| Power of Sale | Foreclosure | |
|---|---|---|
| Who holds title during the process | The original homeowner | Eventually transfers to the lender |
| Court involvement | Not required for the sale itself | Requires a court order |
| Excess proceeds | Returned to the homeowner | Lender keeps the property outright |
| Common in Ontario | Yes — the standard remedy | Rare |
Foreclosure is legally available in Ontario but rarely used, because power of sale is faster for the lender and doesn’t require court proceedings to complete. Almost every distressed-mortgage sale a GTA buyer encounters will be a power of sale, not a foreclosure.
The Power of Sale Process, Step by Step
Before a lender can list a property under power of sale, Ontario law requires several steps designed to give the homeowner a real opportunity to fix the default:
- Default occurs — the homeowner falls behind on mortgage payments per the terms of the mortgage agreement.
- Notice of Sale is served — the lender must provide the homeowner (and certain other parties with a registered interest in the property) formal written notice of its intent to exercise power of sale.
- Statutory redemption period — Ontario law requires a minimum 35-day waiting period after the Notice of Sale before the lender can complete a sale, during which the homeowner can "redeem" the mortgage by paying the full amount owed, including costs, and stop the process entirely.
- Listing and sale — if the default isn’t cured within that period, the lender lists and sells the property, generally through a licensed real estate agent, the same way any other property is marketed.
- Proceeds distributed — after the mortgage balance, legal costs, and any other registered claims are paid from the sale proceeds, any remaining balance goes to the original homeowner.
This redemption period is the key legal protection that distinguishes power of sale from an abrupt, unilateral seizure — the homeowner has a real, legally defined window to resolve the default before losing the property.
Common Misconceptions About Power of Sale
A few misunderstandings come up often enough to address directly:
- "The bank owns the house." Not accurate — the original homeowner retains legal title throughout the process, right up until the sale closes.
- "These are always distressed, run-down properties." Not necessarily. A power of sale is triggered by missed mortgage payments, which can happen to a well-maintained home for reasons unrelated to the property’s physical condition.
- "You can buy it for well under market value, guaranteed." Ontario law requires the lender to seek a fair market price, and buyer competition on a well-priced listing can bring the final sale price close to comparable non-power-of-sale properties.
- "There’s no way to know anything about the property’s history." A title search — a standard step in any Ontario real estate closing — will still reveal registered liens, easements, and other encumbrances, even though the lender itself can’t speak to the home’s day-to-day condition.
Why Do Power of Sale Properties Sometimes Sell Below Market Value?
A lender exercising power of sale is motivated to recover the mortgage balance and associated costs, not to maximize sale price the way a homeowner typically is — which can mean a faster listing and negotiation process than a traditional sale. That said, Ontario law requires the lender to take reasonable steps to obtain a fair market price, so a power of sale is not a guaranteed steep discount, and pricing varies by property just as it does in any other sale.
What’s Different About Buying a Power of Sale Property
A few practical differences show up consistently in power of sale transactions:
- Sold as-is — power of sale properties are typically sold without the seller warranties common in a regular transaction, since the lender selling the property never lived in or knows the detailed condition of the home. A home inspection matters more here, not less — see why an inspection is worth it.
- Limited or no disclosure — lenders generally cannot complete a Seller Property Information Statement the way a homeowner-seller would, since they have no first-hand knowledge of the property’s history.
- Firm timelines — lenders are often less flexible on closing dates and conditions than an individual seller might be.
- Possible occupancy uncertainty — in some cases the former owner or a tenant may still be in the property at the time of sale, which can affect possession timing. This is worth clarifying directly through your realtor before offering.
Because of these differences, a financing condition and a home inspection condition are especially worth including in an offer on a power of sale property — see what conditions should be in an offer for how these are typically structured.
How to Find Power of Sale Listings
Power of sale properties appear on MLS® like any other listing, typically identified in the listing remarks rather than as a separate property type or filter category. The most reliable way to find them on Condohill is to describe what you’re looking for directly to our AI search assistant — try typing something like "power of sale homes in Toronto" or "power of sale properties in Mississauga," and it will search current listing descriptions for that language.
Should You Consider Buying a Power of Sale Property?
A power of sale property can be a reasonable purchase for a buyer who’s comfortable doing extra due diligence — a thorough inspection, a title search, and realistic expectations about limited disclosure — in exchange for a potentially more negotiable price and timeline. It’s generally not the right fit for a buyer who wants full seller disclosure, warranties, or a highly flexible closing process. As with any purchase, working with a realtor experienced in these transactions helps navigate the specific paperwork and timeline differences.
FAQ
Is a power of sale property a bad investment?
Not inherently. It depends on the specific property’s condition and price relative to comparable homes, the same as any other purchase. The main added risk is limited disclosure, which a thorough inspection and title search help address.
Can I get a mortgage on a power of sale property?
Yes, financing works the same way as any other home purchase. Some lenders may request additional documentation given the property’s sale circumstances, so it’s worth discussing with your mortgage broker or lender early in the process.
Does the previous owner get any money from a power of sale?
If the sale proceeds exceed what’s owed on the mortgage, associated legal costs, and any other registered claims against the property, the remaining balance is returned to the original homeowner. This is a key legal distinction from foreclosure.
Are power of sale properties sold as-is?
Typically yes. Since the lender selling the property has no first-hand knowledge of its condition or history, buyers should expect limited disclosure and budget for a thorough home inspection before waiving any conditions.
How is power of sale different from a short sale?
A power of sale is initiated and controlled by the lender after a mortgage default. A short sale, more common in the US than in Ontario, involves the homeowner selling with lender approval for less than what’s owed on the mortgage, while the homeowner remains in control of the listing process.
Can I negotiate the price on a power of sale property?
Yes — offers are negotiated the same way as any other MLS® listing, through your realtor. Lenders are required to seek a fair market price, but that doesn’t rule out negotiation on the specific offer terms.
To see current power of sale listings, describe what you’re looking for to our AI search assistant on the Condohill homepage, or browse homes for sale across the GTA and ask your realtor to flag power of sale properties matching your criteria.
Sources
Listing count reflects Condohill’s synced MLS® data as of September 2026. For the legal framework governing power of sale in Ontario, see the Mortgages Act, R.S.O. 1990 on ontario.ca, which governs the power of sale remedy, and the Financial Consumer Agency of Canada’s mortgage resources.