Mar 28, 2021
THE NEW REALITY: PRIVATE MORTGAGE DEFAULTS - POWER OF SALE & FORECLOSURE - Part XLII of a Series – Power of Sale Litigation part 2
The law in Ontario has always favoured the interests of the mortgage lender who is exercising its power of sale remedy, when trying to obtain repayment of the mortgage loan in default, over the interests of the homeowner/borrower who wants to remain in possession of the mortgaged property. This is true even when the mortgaged property is a family home.
One way in which the province has maintained this slant favouring the mortgagee is to ensure that the law in Ontario permits, if not encourages, mortgage lenders to use their own resources to secure repayment of the mortgage debt after default. This ability of the mortgagee to use its own resources to obtain mortgage repayment is often called a ‘self-help’ remedy. And as its name implies, the mortgagee can do it herself or himself, without resorting to the courts for assistance.
What this means in practice is that the mortgagee can exercise its entire power of sale remedy without starting a court action and without obtaining a court order. The mortgagee can issue a notice of sale and then take possession of a mortgaged property and then list and sell the mortgaged property, all without any involvement of the courts. Contrary to popular opinion, a mortgagee can take possession of a mortgaged property (even residential property) without a court order! But with one very important caveat.
The mortgagee cannot breach the peace when attempting to taking possession of the mortgaged property after default. So, if a home is occupied by a mortgagor and her or his family, and if any of the occupants refuses to vacate the property upon request of the mortgagee, then the mortgagee must turn to the courts and obtain a writ of possession and then request that the local sheriff enforce the writ of possession, in order for the mortgagee to obtain possession of the mortgaged property. And the goal of obtaining a writ of possession from the courts begins with the mortgagee's issue and service of a statement of claim in the Ontario courts.
Next few post will look at the requirements of a statement of claim from the mortgagee’s point of view. Who to sue? And what must be included in the statement of claim? But remember, this blog is intended for information purposes only. It is not legal advice and cannot be relied on as such. Nor is it a substitute for hiring your own legal counsel, who will be an essential member of your mortgage default and power of sale team. And lastly, this blog is just my opinion. I reserve the right to change my mind. And I reserve the right to be wrong.
Be well and stay healthy.