What Is a Power of Sale in Ontario?

You've spotted a listing priced suspiciously low, marked "power of sale." Is it a bargain or a trap? In Ontario, a power of sale is how lenders recover their money when a borrower defaults on a mortgage — and these homes do sometimes sell below market. But the process has real risks for buyers. Here's how a power of sale works and what to watch for.

Key takeaways

• A power of sale lets an Ontario lender sell a property after the borrower defaults — without taking ownership first.
• It's faster than foreclosure and is the most common default remedy used in Ontario.
• Power-of-sale homes are sold "as-is" with limited information and few guarantees.
• Bargains exist, but condition risk and competition can erase the discount.
• HOMEH is a licensed Ontario brokerage and gives eligible buyers the industry's highest Cashback Rebate.

What a power of sale actually is

A power of sale is a legal right written into most Ontario mortgages that lets the lender sell the property if the borrower falls seriously behind on payments. The goal is to recover the outstanding mortgage balance, plus costs and interest. Importantly, the lender sells the home on behalf of the borrower — it does not take title first.

Crucially, any money left over after the lender is repaid (and after legal and selling costs) goes back to the borrower. The lender isn't trying to profit; it's trying to be made whole. That distinction shapes how these sales are priced and conducted.

Power of sale vs foreclosure

People use these terms interchangeably, but they're different legal processes. In Ontario, power of sale is far more common because it's faster and cheaper for lenders than foreclosure.

Why lenders prefer it

Because power of sale avoids a lengthy court process and lets the lender recover funds quickly without holding title, it's the default remedy most Ontario lenders reach for first.

What it means for buyers

Power-of-sale properties can sell below market value — but the discount comes with strings. The lender's duty is to sell at a reasonable price and recover its money, not to disclose every detail of the home. That leaves buyers with less information than a normal sale.

• Homes are typically sold "as-is, where-is" with no warranties about condition.
• Sellers (the lender) usually offer little or no history about the property.
• Former owners may have deferred maintenance or removed fixtures.
• Offers are often firm, leaving little room for conditions.
• Closing can move quickly, and competition can push prices up.

Do extra due diligence

With limited disclosure, lean harder on your own checks. A home inspection and an appraisal matter even more, and a lawyer should confirm the lender followed proper notice procedures. Walk through our questions to ask when buying a house first.

How to buy a power-of-sale home wisely

Treat a power-of-sale purchase like any other Ontario transaction — only with extra caution. Because conditions may be limited and the home is sold as-is, line up your financing and team before you bid.

• Get pre-approved so you can act fast and bid with confidence.
• Budget for repairs the lender won't disclose or fix.
• Engage a real estate lawyer early — required to close in Ontario.
• Don't overpay chasing a "deal" in a competitive bidding situation.

A real estate lawyer is mandatory and especially valuable here — see do you need a real estate lawyer in Ontario. Confirm your budget with the affordability calculator and follow the full process in how to buy a house in Ontario.

Buy with confidence — and cashback — through HOMEH

Power-of-sale deals reward preparation and good representation. As a licensed Ontario brokerage, HOMEH helps you navigate as-is purchases and gives eligible buyers the industry's highest Cashback Rebate — a cushion that can absorb the repairs these homes often need. Browse current listings on the HOMEH listings page and estimate your rebate with the cashback calculator.