What is Foreclosure Law (for Ontario Homeowners)?
Published on 29 August 2022, 07:22:56 AM
No one buys a home or investment property expecting to be in foreclosures.
Life happens. Are you letting foreclosure happen to you because you don’t know your legal options?
Axess Law real estate lawyers could save your home from mortgage defaults, and other serious contract breaches, by finalizing a mortgage refinancing deal.
We close the sale if you’re forced to list.
Stop Foreclosure
Mortgage defaults are serious for your lender and credit rating. Yet many contractual disputes can be amicably resolved. Whether you:
- stopped paying property taxes
- remortgaged without your lender’s consent
- underinsured a home or investment
- hurt its saleability by letting your home fall into serious disrepair
- or listed your home or property without telling your lender
Axess Law has affordable virtual lawyers who can work with you if you refinance or sell your property, or if your matter is outside our scope, refer you to a real estate lawyer who specializes in this area. Starting over could repair your damaged credit score.
How Foreclosures Work in Canada
Having a foreclosed home means you’ve breached your lender’s mortgage conditions. They are about to approach a court for a certificate of foreclosure.
You could be just four steps away from losing your home. Once your lender sells, they’ll take your down payment, plus any profits from equity your home earned while you owned it.
Until your credit rating recovers, borrowing money, buying vehicles, and getting simple credit cards could be a nightmare.
4 Steps to Foreclosure
Step 1: Lender Makes Demands
Constant phone calls or demand letters from your bank or lender are interrupting your day. If you’ve been asked to pay the mortgage balance in full, don’t panic just yet. Contact your lender and ask for more time to pay, or other ways to remedy your contract that could keep you in your home, or protect your investment property. We make referrals if you need a lawyer near you to write or call your lender.
Legal advice on refinancing your mortgage.
Step 2: Notice of Sale or Foreclosure Claim is Sent
When efforts to patch up your relationship with your lender break down, you may get a notice of sale, or statement of foreclosure claim. Outstanding balances and legal or other fees may be required to prevent your lender from going further.
Asking a bank, credit union, trust company, or private lender to take over your mortgage is one option. Requesting consent to sell a property yourself to pay out the mortgage may also save the day.
Questions you ask us about buying and selling.
Step 3: Power of Sale
Somewhere in your mortgage contract fine print is the term ‘power of sale’. It’s just one legal remedy your lender can use to recover their investment. Your lender can literally list your property for sale.
By that point, your home or investment property often doesn’t have much market value. You risk losing everything by letting a lender use power of sale. Besides the outstanding mortgage, your lender will deduct legal fees, interest and penalties, leaving you with little, if any, return.
You lose the down payment and any money you spent on upgrades, let alone the peaceful enjoyment of your family home, or future rental income. If your home is an income property, your landlord obligations cease, but you remain liable for your past actions as landlord. Read section 44 of the Ontario Mortgages Act about how power of sale affects rental properties.
What to do next.
Step 4: Judicial Foreclosure
You may have successfully prevented power of sale only to be faced with an application for judicial foreclosure. If your situation hasn’t improved, your mortgage lender may file a legal claim in Ontario court.
Unless you can satisfy the court’s request for payment in the next 30 days, the court could grant a judgment against you. Your home could go up for sale again, typically by auction. Your possible eviction by a sheriff will be observed by the whole block, or so it will seem.
Bad news: if the lender gets less for your home than you owe, you might be hit with a deficiency judgment for the balance. Or they may just walk away, leaving you with a bad credit score.
Find Foreclosure Listings in Canada
You can buy foreclosed property by asking any Ontario realtor. Local realtors can search the MLS for you, or make enquiries to find potential properties for sale by foreclosure in Canada. Homes are sold “as is”. Make offers conditional on a professional home inspection and mortgage financing. Axess Law can review your draft offer to purchase before or after you submit it. We close real estate transactions by liaising with your realtor and mortgage lender to meet completion dates on time.
Affordable Real Estate Lawyers, Anywhere You Are
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
Make Day or Evening Appointments
Our virtual real estate lawyers video conference with you online, anywhere in Ontario, 7 days a week. Make an appointment with a remote real estate lawyer by dialing toll free to 1-877-552-9377, or call our 647-479-0118 lawyer line in Greater Toronto Area.
Using our online booking form to make appointments takes just minutes. Drop by any Axess Law location to select appointment times in person, or give us copies of real estate or mortgage documents.
We have convenient onsite parking, or take the transit. We’re near major transit stops.
