What happens after a notice of sale in Ontario

Last reviewed October 2026 · General information, not legal advice

Most Ontario lenders enforce a mortgage default by power of sale under Part III of the Mortgages Act. Here is what typically happens after the notice of sale arrives, and what you can do at each stage.

Stage 1: The notice of sale

The lender can serve a notice of sale once the mortgage has been in default for at least 15 days. The notice sets out the amount needed to bring the mortgage into good standing, the amount needed to pay it out, and the date after which the lender may sell.

The notice goes to the borrower and to others with an interest in the property, such as later mortgagees, lien holders and, for a matrimonial home, the borrower's spouse. It is usually sent by registered mail.

Stage 2: The 35-day redemption period

The lender must wait at least 35 days after giving notice before it can sell. During this period you can reinstate the mortgage by paying the arrears and permitted costs, or pay it out in full. The lender generally cannot start other enforcement proceedings during this period. The power of sale calculator shows the dates and the two amounts side by side.

Stage 3: A lawsuit for payment and possession

A notice of sale does not let a lender change the locks. To take possession of an occupied home, the lender usually starts a court action claiming payment of the debt and possession of the property.

When you are served with the statement of claim, you have 20 days to deliver a defence if served in Ontario. If you don't respond, the lender can have you noted in default and get judgment without a hearing. Use the court deadline calculator to find your exact date, and read our guide to responding to a mortgage statement of claim.

With judgment in hand, the lender asks the court for a writ of possession, which the Sheriff enforces. Many owners leave voluntarily before this point.

Stage 4: Listing and selling

Once the lender has possession, or the property is vacant, it lists the property, usually on MLS through a real estate agent. Ontario courts require a selling lender to take reasonable steps to get the best price reasonably obtainable at the time of sale, which normally means proper marketing and an appraisal.

Until the lender signs a binding agreement of purchase and sale, you can generally still pay out the mortgage and stop the sale. After that, your right to redeem is usually gone.

Stage 5: Paying out the sale proceeds

From the sale price, the lender pays:

1. the costs of the sale, such as real estate commission and legal fees;
2. the amount owing on its own mortgage, including interest and enforcement costs;
3. any later mortgages and registered claims, in order of priority;
4. any remaining surplus to the owner.

You are entitled to an accounting of how the money was applied. If the figures look wrong, ask for the statement in writing.

Stage 6: A shortfall

If the sale price doesn't cover the debt, the lender can sue you for the shortfall, called a deficiency. This is one reason a sale you control, at full market value, is usually better than a lender's sale. If you believe the lender sold too cheaply, that can be a defence to a deficiency claim.

What about tenants?

If the property is rented, tenants keep their rights under the Residential Tenancies Act. A lender that takes possession steps into the landlord's position and can end a tenancy only on the grounds and notice that Act allows.

Key dates at a glance

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.