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    Buying by Power of Sale

    Occasionally homeowners are unable to maintain the mortgage on a property. When this happens, I am often called upon by lenders to help. I am being retained by the lender to recover the funds that were borrowed, plus interest and costs. There is nothing nefarious about it. Most lenders give the homeowner ample opportunity through non-legal processes to get back into good standing. However, for a variety of reasons, the homeowner is unable to put the mortgage back into good standing. I will then issue a Notice of Sale to warn the owner that if the default is not cured, the property will be sold. When the warning period expires, I will then list the property for sale to others in order to recover the debt. You may be looking at purchasing a house from a lender who is selling the house using the authority granted to them under the power of sale provisions of the Mortgages Act.

    There is nothing wrong with buying a property by way of power of sale. There are many high quality properties being sold this way, and many people are very happy with their purchases. The important point to note is that the Agreement of Purchase and Sale will have a schedule attached to it, which will add to and modify many of the standard terms of an agreement. In order to understand these kinds of schedules it is a good idea to retain a lawyer to review and explain it to you. If you do not speak to a lawyer, you may be unaware of the legal meaning of some of the terms in such a power of sale schedule.

    It is a myth that you can get a “good deal” from the lender because it can sell a property for whatever it wants. This is not the case. The lender has an obligation to sell the property at fair value for the property. Otherwise the lender may expose themselves to liability. As much as a lender wants to recover the loaned funds, it is a non-starter if in so doing the lender is sued for selling for too low of a price.

    If you would like to purchase a property from a lender, and you would like the writer to represent you on the purchase, please contact Noah Potechin here or by calling 613-563-6692.

    The content on this website is for information purposes only and is not legal advice, which cannot be given without knowing the facts of a specific situation. You should never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. The use of the website does not establish a solicitor and client relationship. If you would like to discuss your specific legal needs with us, please contact our office at 613-563-7544 and one of our lawyers will be happy to assist you.

    Posted By: Noah Potechin of Merovitz Potechin LLP


    Noah Potechin joined Merovitz Potechin LLP in 2013 as an articling student and was called to the Ontario Bar in June 2014. As an articling student, Noah was exposed to a wide range of legal issues, such as residential and commercial real estate, leasing, business law, estate litigation and construction lien work. He has now begun practicing law full time at Merovitz Potechin LLP, focusing primarily on residential real estate and mortgage enforcement.  Noah also practices in the area of private mortgage financing, title corrections, commercial real estate transactions, residential leasing, development law and the preparation and registration of Notices of Lease.

    When not spending time with his young family or exploring world cuisine with his wife, Noah can be found at the top of mountains eager to snowboard or in his dojo, teaching the martial art Aikido.