Power of sale vs foreclosure in Ontario: the difference
Last reviewed October 2026 · General information, not legal advice
Ontario lenders have two main ways to enforce a defaulted mortgage. Almost all choose power of sale. Here is how the two remedies differ and why it matters to a homeowner.
The short version
| Point | Power of sale | Foreclosure |
|---|---|---|
| Court action needed? | No, for the sale itself | Yes |
| Typical speed | Months | Often longer |
| Who sells? | The lender, on the open market | The lender keeps the property |
| Surplus after the debt | Goes to later creditors, then the owner | Lender generally keeps it |
| Shortfall | Lender can sue for it | Claim for the debt is generally extinguished |
Power of sale
Power of sale comes from the mortgage and Part III of the Mortgages Act. After 15 days of default, the lender serves a notice of sale. After at least 35 more days, it can sell the property to a third party, without a court order for the sale itself.
The lender must account for the proceeds. After its debt and costs are paid, later mortgagees are paid in order, and any surplus goes to the owner. The lender must also take reasonable care to get the best price reasonably obtainable.
If the home is occupied, the lender usually still needs a court judgment for possession before it can sell with vacant possession. See what happens after a notice of sale for the full timeline.
Foreclosure
Foreclosure is a court proceeding that ends the borrower's right to redeem and transfers the property to the lender outright. The lender doesn't have to sell, and doesn't have to account for any equity above the debt.
Because the owner can lose all their equity, the court process includes protections. Owners get a redemption period, and a defendant can ask the court to order a sale instead of foreclosure. In that case the property is sold and the surplus is protected.
Why Ontario lenders prefer power of sale
- It is faster and cheaper, because the sale itself needs no court order.
- The lender keeps the right to sue for a shortfall. Foreclosure generally ends the claim on the debt.
- The lender avoids becoming the owner of a property it doesn't want to hold.
What it means for you
In a power of sale, your equity is protected in law, but a lender's sale often brings less than you would get by selling yourself, and enforcement costs come out of the proceeds. If you have equity, act early: reinstate if you can, or sell on your own terms. Our guide on how to stop a power of sale covers each option.
If you are served with a claim for foreclosure, get legal advice quickly. The right to ask for a sale instead must be exercised within the time the Rules allow.
This is general information. Every mortgage and every file is different. Speak to an Ontario lawyer or licensed paralegal about your situation before you act.