Buying a Power of Sale Home in Ontario

Power of sale homes are real homes, sold by a lender instead of the owner. They can be a good way into a market, but the process runs on different rules than a normal sale. This guide walks through what those rules are, in plain language, so you know what you are signing up for before you make an offer.

What a power of sale is

When someone buys a home with a mortgage, the lender gets the right to sell that home if the loan is not paid. If the owner falls behind, the lender can use that right to sell the property and recover what it is owed. In Ontario this is called a power of sale.

The lender does not need a court order to do this, but it must follow strict notice rules under Ontario's Mortgages Act. For most mortgages (those that include a power of sale clause), a notice of sale can only be sent after a payment has been missed for at least 15 days, and the sale cannot be completed until at least 35 days after that notice. Mortgages without that clause follow a slower process with a longer notice period. The owner may still be able to bring the mortgage back into good standing before the sale is completed.

The lender usually lists the home with a real estate brokerage, just like any other listing, sometimes while the notice period is still running. That is how it shows up on REALTOR.ca, and on this site.

Power of sale vs. foreclosure

People often say “foreclosure” for any home a lender is selling. In Ontario, lenders usually use power of sale instead. The difference matters:

• Power of sale: the lender sells the home, takes what it is owed from the sale price, and any money left over goes to the owner (and other creditors). No court is needed.
• Foreclosure: the lender goes to court and takes ownership of the home itself. It is slower and more expensive, so lenders in Ontario rarely use it.

For you as a buyer, the practical point is this: in a power of sale you are buying from a lender that wants a clean sale, not from a family that lived there.

Buying one, step by step

1. Find the home

Every power of sale listing on this site comes from the REALTOR.ca data feed and updates nightly. Browse the listings, or save a search so new ones reach your inbox.

2. View it, carefully

Book a showing and look closely. The previous owner may have left in a hurry, and nobody has fixed things up for sale. Bring a list of questions, and plan for a home inspection if the lender's terms allow one before you firm up.

3. Line up your financing first

Get a mortgage pre-approval before you offer. Lenders selling under power of sale often prefer offers with few or no conditions, and the closing date can be short, so your money needs to be ready.

4. Make an offer, “as is, where is”

Power of sale homes are sold “as is, where is”. That means the lender makes no promises about the condition of the home, what is inside it, or whether everything works. What you see is what you get.

5. Read the lender's schedule

The lender attaches its own terms to the agreement, usually as a schedule. These terms protect the lender and often limit what you can claim later. Read them with your agent and your lawyer before you sign. They are not the same from one lender to the next.

6. The deposit

Your offer sets the deposit: how much, when it is paid, and who holds it (usually in trust by a brokerage). If the deal falls through because of something on your side, you can lose it, so make sure your financing is solid first.

7. Closing

Your lawyer checks the title, confirms the lender followed the notice rules and has the right to sell, and handles the transfer. Your agent and lawyer keep you posted until the keys are yours.

The real risks

These are the things that make a power of sale different. None of them should scare you off, but you should know them going in.

• No warranties from the seller. The lender never lived in the home and does not know its history. Hidden problems become yours.
• Occupancy. Many homes are vacant by the time they sell, but not all. If someone is still living there, ask what the lender will do before closing.
• Liens and unpaid bills. Property taxes, utility arrears, or other claims can be tied to the property. Your lawyer's title search is where these come to light.
• Tight timelines. Closing dates can be short and hard to move. Have your financing, lawyer and moving plan ready early.
• Deals can fall apart. Rarely, the owner catches up on the debt or the lender changes course, and the sale does not go ahead. Your lawyer will tell you where you stand.

If you're an investor

The same process applies, with a few extra things to weigh:

• Budget for the work. Price in repairs you cannot see yet, and a cushion on top.
• Plan for vacancy. If you mean to rent it out, count the months to get it rent-ready and leased.
• Know the tenancy position. If a tenant is in place, their lease and rights under Ontario's tenancy law come with the home.
• Move fast, but not blind. Clean offers win these, but only after the inspection and the lender's schedule have been read.

Questions about a specific property? The FAQ covers the common ones, or ask Kai below. Facing a power of sale on your own home? Here is what to do next.