Understanding the foreclosure process in Ontario
Foreclosure is a legal process that allows a lender to sell a property in order to recover the amount owed on a mortgage. In Ontario, the foreclosure process is governed by the Courts of Justice Act and the Mortgage Act. Here's a brief overview of the foreclosure process in Ontario:
Default: A mortgage is considered to be in default when a borrower fails to make mortgage payments as agreed in the mortgage agreement. The lender will usually send a notice of default to the borrower.
Statement of claim: If the borrower does not bring the mortgage payments up to date, the lender can begin legal action by filing a statement of claim with the court. The statement of claim will outline the amount owing on the mortgage and the reason for the claim.
Notice of sale: If the court finds in favor of the lender, the lender can then file a notice of sale, which sets out the terms and conditions of the sale of the property. The notice of sale must be published in a local newspaper for at least three weeks.
Sale: If the property is not redeemed by the borrower or any other interested parties, the lender can then proceed with the sale of the property. The sale is typically conducted by a public auction or tender process.
Surplus: If the sale price of the property exceeds the amount owed on the mortgage and any other costs associated with the sale, the surplus funds will be returned to the borrower. If there is a shortfall, the borrower may be responsible for paying the difference.
It's important to note that the foreclosure process can be a lengthy and costly process for both the borrower and the lender. In addition to the financial impact, foreclosure can also have a significant emotional toll on the borrower and their family. It's important to seek professional legal and financial advice as soon as possible if you are experiencing financial difficulties and are at risk of defaulting on your mortgage. There may be options available to you, such as refinancing or a consumer proposal, that can help you avoid foreclosure.
