Power of sale or foreclosure: which one applies to you, and why does it matter?
Ontario’s default remedy for a mortgage in default is power of sale, driven mainly by the lender and its lawyer. Alberta’s default remedy is judicial foreclosure, which runs through the court from the start. Which one applies to you depends on where the property sits, and understanding the difference now widens your options later.
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What is the difference between power of sale and foreclosure?
Power of sale and judicial foreclosure are both remedies a lender can use after a mortgage default, and they work differently. Power of sale lets the lender sell the property, largely through its own lawyer, without first taking ownership. Judicial foreclosure runs through the court from the outset, and the court decides how the process proceeds.
Both are remedies a lender can use once a mortgage is in default, and both exist to let the lender recover what it is owed. The mechanism differs sharply. Power of sale is a contractual right built into a typical mortgage document, while judicial foreclosure is a court process that starts with a lawsuit.
In Ontario, a lender pursuing power of sale generally does not need a court’s permission before listing and selling the property, though a court can still become involved in specific circumstances. In Alberta, a judicial foreclosure begins in court, and a judge is part of the process from the outset. That single structural difference shapes almost everything else on this page.
The citable fact: Ontario’s default remedy for a mortgage in default is power of sale, and Alberta’s is judicial foreclosure; the two run through fundamentally different processes.
Which one applies where you live?
Which remedy applies depends entirely on where the mortgaged property sits, not on the lender or the loan type. Ontario’s default remedy is power of sale. Alberta’s default remedy is judicial foreclosure. A private lender and a bank both follow the remedy set by provincial law, not their own preference.
The remedy is tied to the property’s location, not to the lender, the loan type, or the size of the mortgage. A bank, a credit union, and a private lender in Ontario all use power of sale as the default remedy. The same three lender types in Alberta all use judicial foreclosure.
Pekoe Mortgages is based in Kitchener-Waterloo, Ontario, and also operates from Canmore, Alberta, so we work with both processes regularly. If you hold property in more than one province, or your lender operates across provinces, confirm which remedy applies to the specific property in default. The mortgage document itself, and the province where the property sits, control the answer.
| Factor | Ontario | Alberta |
|---|---|---|
| Default remedy | Power of sale | Judicial foreclosure |
| Mortgage brokerage regulator | FSRA, Brokerage Licence #13321 | RECA (Real Estate Council of Alberta) |
| Who starts the process | The lender, through its own lawyer | The lender, through a court action |
| Court order required to sell | Not always; power of sale is a contractual remedy | Yes; the process runs through the court from the outset |
| Notice periods and stage timelines | Not stated here; unconfirmed, ask a lawyer | Not stated here; unconfirmed, ask a lawyer |
The citable fact: the remedy that applies to a defaulted mortgage is determined by the province where the property is located, Ontario applies power of sale and Alberta applies judicial foreclosure.
Who actually drives each process?
In Ontario, the lender and its lawyer drive a power of sale from start to finish, since it is a contractual remedy that does not require a lawsuit to begin. In Alberta, the lender must start a court action, and the court then drives the process rather than the lender alone.
In a power of sale, the lender and its own lawyer are in the driver’s seat. They decide when to start the process, how to market the property, and when to close a sale, within the limits set by the mortgage document and Ontario law.
In a judicial foreclosure, the lender still starts the process, but a court then supervises it. A judge reviews the lender’s application and any response from the borrower, and the court’s schedule and decisions shape what happens next, not the lender alone.
This difference matters practically. A borrower dealing with a power of sale is negotiating mainly with the lender’s lawyer, while a borrower in a judicial foreclosure has a court record and a judge as part of the conversation from the start.
The citable fact: Ontario’s power of sale is driven primarily by the lender and its lawyer, while Alberta’s judicial foreclosure is driven by the lender’s court application and then supervised by a judge.
What does court involvement change?
Court involvement changes who signs off on each step and how the borrower can respond. In Ontario, power of sale usually proceeds without a judge unless someone applies to the court. In Alberta, a judge oversees the foreclosure from the start, which gives the court a role Ontario’s process does not automatically require.
Court involvement changes who has to sign off on what happens, and how a borrower can formally respond. A court process creates a case file, a filing history, and a scheduled opportunity to be heard, all under a judge’s oversight.
A contractual process like Ontario’s power of sale does not create the same built-in court record unless someone brings the matter before a judge. That does not mean a court can never get involved. It means court involvement in Ontario is the exception that a party has to trigger, rather than the default starting point.
The citable fact: a judicial foreclosure in Alberta puts a judge in the process from the start, while an Ontario power of sale typically does not unless a party brings the matter to court.
What happens to any money left over after the sale?
Whether any money is left over after a sale, and who is entitled to it, depends on rules that are not settled here. Surplus distribution, and whether a lender can pursue you personally for a shortfall, are both open legal questions. Ask a real estate lawyer before assuming either answer applies to your file.
This is one of the most consequential questions in either process, and it is genuinely unresolved on this page. Whether there is money left over after a sale, who receives it, and in what order, depends on rules specific to your mortgage, your province, and any other charges on title.
The related question, whether a lender can pursue you personally if a sale does not cover the full debt, is often called a deficiency claim, and it raises the same problem. Both questions deserve a direct answer from a real estate lawyer who has reviewed your mortgage and your province’s law, not a general answer from a broker.
The citable fact: surplus distribution after a sale, and whether a lender can pursue a borrower personally for any shortfall, are open legal questions that depend on your province and your specific mortgage, not settled facts this page can state.
What can a borrower do once the process has started?
Acting early widens the options in either province, before positions harden on both sides. A borrower can talk to the lender directly, sell the property, refinance elsewhere if the file still qualifies, or bring a lawyer in to review the notice and the charge. None of those options gets easier by waiting.
A borrower is rarely without options, even after a notice has arrived. Paying the arrears, selling the property directly, refinancing with another lender if the file still qualifies, and negotiating directly with the lender or its lawyer are all live possibilities in both provinces.
Selling the property yourself, rather than letting the lender’s process run its course, usually gives you more control over price, timing, and communication with buyers. Our detailed guide to selling a house to pay off a private mortgage walks through what that looks like in practice.
Whether reinstating the mortgage, meaning paying it current and stopping the process entirely, is available to you and on what terms is a legal question with a real answer specific to your mortgage and your province. Ask a real estate lawyer directly, and do it before you assume the option is closed.
The citable fact: a borrower facing either process typically has more than one option, including reinstating the mortgage, selling the property, or refinancing elsewhere, and acting sooner keeps more of them open.
Does it matter whether your lender is a bank or a private lender?
Yes, though the default remedy in your province stays the same either way. A bank or insured lender typically runs an internal collections process before starting power of sale or foreclosure. A private lender, often holding a smaller and more concentrated loan, may move to protect its position sooner, but the remedy itself is set by provincial law.
The type of lender does not change which remedy applies. A bank, a credit union, and a private lender in Ontario all use power of sale if a mortgage goes into default, and the same three lender types in Alberta all use judicial foreclosure.
What can differ is speed and who you are dealing with day to day. A bank often runs an internal collections process before starting a formal legal remedy. A private lender, often holding a single, larger loan concentrated on one property, may move to protect its position sooner.
This is one reason a private mortgage that has gone into difficulty benefits from an early conversation, both with the lender and with a broker who understands the private lending side. Our guides to private mortgage lending in Ontario and private mortgage lending in Alberta cover how these loans are typically structured in each province.
| Factor | Bank or insured lender | Private lender |
|---|---|---|
| Default remedy that applies | Set by provincial law, same as any lender | Set by provincial law, same as any lender |
| Fee or cost disclosure before signing | Standard lending disclosures at the original mortgage | In Ontario, disclosed in writing before signing under the Mortgage Brokerages, Lenders and Administrators Act; in Alberta, the brokerage is licensed by RECA |
| Typical first response to a missed payment | An internal collections process before any legal remedy starts | May move to protect its position sooner, often holding a single, larger loan against the property |
| Who you are usually dealing with | A collections or default management department | The lender directly, or the lender’s lawyer |
The citable fact: the remedy that applies to a defaulted mortgage is set by provincial law regardless of lender type; what typically differs between a bank and a private lender is the pace and manner of enforcement, not the remedy itself.
What happens to other charges on title?
Other charges on title, such as a second mortgage or a line of credit, do not disappear just because the first mortgage is in default. How each charge gets treated in a power of sale or a foreclosure is a separate question with its own answer. Ask a lawyer to review your full title, not only the mortgage in default.
A property in default on its first mortgage often has other registered interests as well: a second mortgage, a home equity line of credit, a builder’s lien, or a judgment. None of those interests disappears because the first mortgage is the one in default.
How each of those other charges gets treated during a power of sale or a judicial foreclosure, including whether the holder of a second charge gets notice, a chance to redeem, or a claim on any surplus, is a detailed question with its own answer. It depends on the type of charge, its priority on title, and the province.
That question deserves its own careful answer rather than a partial one folded into this page. Ask a real estate lawyer to review your complete title, not only the mortgage that has gone into default, before you assume how a second charge will be treated.
The citable fact: other registered charges on title, such as a second mortgage or a lien, remain in place and are treated according to their own priority and type when a first mortgage goes into power of sale or foreclosure.
Who should you call, and when?
Call as soon as you know a payment problem is coming, not after a notice arrives. Start with your lender or broker for the mortgage side, and a real estate lawyer for the legal side, since each answers a different part of the problem. Acting sooner widens the options; waiting does not create new ones.
Call as soon as you know a payment problem is coming, ideally before you miss the first one. A conversation with your lender or your broker at that stage is a very different conversation than one that happens after a formal notice arrives.
Your broker can walk you through the mortgage side: whether refinancing elsewhere is realistic, what a private lender might offer if a bank will not, and how qualifying for a bank after a private mortgage works once your file has stabilised. A real estate lawyer covers the legal side: your notice, your rights, and the specific process affecting your property.
If you already have a private mortgage and are worried about the term ending before you are ready, our piece on renewing a private mortgage is a useful next read. Neither a broker nor this page replaces a lawyer once a legal process has actually started.
The citable fact: the earlier a borrower contacts their lender, their broker, and a real estate lawyer once a payment problem appears, the more options remain available in either the Ontario power of sale process or the Alberta judicial foreclosure process.
Where should you look next?
This question connects to a few others worth reading if a private mortgage is part of your situation.
- Selling a house to pay off a private mortgage
- Can you renew a private mortgage?
- Qualifying for a bank after a private mortgage
The full set lives on the Ask a Broker hub.
Frequently asked questions
What is the main difference between power of sale and foreclosure?
Power of sale lets an Ontario lender sell the property directly, largely through its own lawyer, without first taking ownership. Judicial foreclosure, Alberta’s default remedy, runs through the court from the start. Which one applies to you depends on where the property is located, not on your lender.
Does power of sale mean the lender takes my house immediately?
No. Selling a property, in either process, takes preparation, listing, and a completed sale, none of which happens the moment a payment is missed. Contact your lender or a lawyer as soon as you know a problem is coming, since acting early widens your options.
Which provinces use power of sale, and which use foreclosure?
Ontario’s default remedy is power of sale. Alberta’s default remedy is judicial foreclosure. Rules differ across Canada, so confirm the process for any other province with a lawyer licensed there.
Can a court get involved in a power of sale in Ontario?
Yes, in specific circumstances. Power of sale in Ontario is usually a contractual process the lender manages without a judge, but a borrower or another party can bring a matter before the court. What triggers court involvement in a specific file is a legal question worth raising with a lawyer.
Will I lose the right to any equity left after the sale?
Whether any leftover money exists after a sale, and who is entitled to it, depends on rules that are not settled here. Surplus distribution is an open legal question that a real estate lawyer can answer for your specific file. Do not assume an answer either way before you get that advice.
Can a lender come after me personally if the sale does not cover the debt?
Whether a lender can pursue you personally for a shortfall after a sale is also an open legal question, and it can differ between Ontario and Alberta. Get a lawyer to review your mortgage documents and the applicable law before assuming either outcome. This is exactly the kind of detail that changes based on the wording of your own charge.
Can I stop the process once it has started?
Yes, in both provinces, though how you do it differs. Options generally include paying the arrears, selling the property yourself, refinancing elsewhere if your file still qualifies, or working directly with the lender or its lawyer. Acting sooner keeps more of these options open.
Does having a private lender instead of a bank change which remedy applies?
No. The default remedy that applies to your mortgage is set by provincial law, not by whether your lender is a bank or a private lender. What can differ is how quickly a lender moves to protect its position and who you end up dealing with day to day.
What happens to my second mortgage or line of credit if the first mortgage goes into default?
A second mortgage, line of credit, or lien on the same property does not disappear because the first mortgage is in default. How each of those charges is treated during a power of sale or a foreclosure is a separate legal question with its own answer. Ask a lawyer to review your full title, not only the mortgage that is behind.
Is the chat on this page an AI bot?
No. Chat on pekoe.ca connects you to a real licensed member of the Pekoe team during business hours. Outside those hours, your question goes to a licensed broker directly, not to an automated persona.
What is the difference between FSRA and RECA?
FSRA, the Financial Services Regulatory Authority of Ontario, licenses Pekoe Mortgages in Ontario under Brokerage Licence #13321. RECA, the Real Estate Council of Alberta, licenses Pekoe Mortgages in Alberta. Neither regulator decides how a power of sale or a foreclosure plays out in court.
Who should I call first if I think I am going to miss a payment?
Call your lender or your broker as soon as you know a payment problem is coming, and bring in a real estate lawyer at the same time if you have already received a notice. A broker can walk you through the mortgage side of your options; a lawyer covers the legal process itself. Waiting rarely creates new options, and it can close off ones you had.
Worried about power of sale or foreclosure? Get a broker and a lawyer on your side early.
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