The process of buying a property through a power of sale in Ontario

January 18, 2023

POWER OF SALE IN ONTARIO

A power of sale is a provision in a mortgage agreement that allows the lender to sell the property if the borrower defaults on their mortgage payments. In this article, we will discuss the process of buying a property through a power of sale in Ontario and the benefits and drawbacks of this type of purchase.

The process of buying a property through a power of sale typically begins with the lender issuing a notice of sale. This notice is typically posted on the property and in a newspaper, and it gives the borrower a certain amount of time to catch up on their mortgage payments before the sale of the property takes place.

Once the notice of sale has been issued, the property is put up for sale through a local MLS System that is listed on the Real Estate Board Site of that city for example TREB : Toronto Regional Real Estate Board. Offers are invited and the highest offer received usually buys the property.

One of the benefits of buying a property through a power of sale is that the properties are often sold at a discounted price. The lender is typically looking to recoup as much of their losses as possible, and as such, they may be willing to sell the property for less than its market value.

Another benefit of buying a property through a power of sale is that the process is relatively quick. The sale process typically takes place within a few months of the notice of sale being issued, and once the sale is complete, the new owner can take possession of the property.

However, there are also drawbacks to buying a property through a power of sale. One of the main drawbacks is that the property may be in poor condition. The borrower may have fallen behind on their mortgage payments because they were unable to keep up with repairs and maintenance, and as such, the property may be in need of significant repairs.

Another drawback of buying a property through a power of sale is that the new owner may be responsible for any outstanding taxes or liens on the property. It is important to do your due diligence and research the property thoroughly before making a bid to avoid any surprises.

Buying a property through a power of sale can be a great way to purchase a property at a discounted price, but it also comes with certain risks. It's important to weigh the pros and cons of buying a property through a power of sale, and to do your due diligence before making a bid.

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