Power of Sales Real Estate

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Mortgages Act, R.S.O. 1990, c. M.40

Definitions - II


Powers incident to mortgages after default

24.Where any principal money is secured by mortgage of land, the mortgagee, at any time after the expiration of three months from the time of default in the payment of any money due under the mortgage or after any omission to pay any premium of insurance that by the terms of the mortgage ought to be paid by the mortgagor, has the following powers to the like extent as if they had been in terms conferred by the mortgage:

Power of sale

1. A power to sell, or to concur with any other person in selling, the whole or any part of the mortgaged property by public auction or private contract, subject to any reasonable conditions the mortgagee may think fit to make, and to buy in at an auction and to rescind or vary contracts for sale, and to resell the land, from time to time, in like manner without being answerable for any loss occasioned thereby.

Power to insure

2. A power to insure and to keep insured against loss or damage by fire any building or any effects or property of an insurable nature, whether affixed to the freehold or not, being or forming part of the mortgaged property, and the premiums paid for any such insurance are a charge on the mortgaged property, in addition to the mortgage money and with the same priority and with interest at the same rate as the mortgage money. R.S.O. 1990, c. M.40, s. 24.

Receipts for purchase money sufficient discharges

25.A receipt for purchase money given by the person exercising the power of sale conferred by section 24 is a sufficient discharge to the purchaser, who is not bound to see to the application of the purchase money. R.S.O. 1990, c. M.40, s. 25.

Notice before sale

26. (1)No sale under the power conferred by section 24 shall be made until after forty-five days notice in writing in the Form to this Act has been given to the persons and in the manner provided by Part III.


(2)The notice may be given at any time after fifteen days default in making any payment provided for by the mortgage. R.S.O. 1990, c. M.40, s. 26.

Application of purchase money

27.  The money arising from the sale shall be applied by the person receiving the same as follows:

Firstly, in payment of all the expenses incident to the sale or incurred in any attempted sale;

Secondly, in discharge of all interest and costs then due in respect of the mortgage under which the sale was made;

Thirdly, in discharge of all the principal money then due in respect of the mortgage;

Fourthly, in payment of the amounts due to the subsequent encumbrancers according to their priorities;

Fifthly, in payment to the tenants of the mortgagor of the rent deposits paid under section 106 of the Residential Tenancies Act, 2006 where the rent deposit was not applied in payment for the last rent period,

and the residue shall be paid to the mortgagor. R.S.O. 1990, c. M.40, s. 27; 1991, c. 6, s. 1; 1997, c. 24, s. 215 (1); 2006, c. 17, s. 252 (1).

Conveyance to the purchaser

28.The person exercising the power of sale has power to convey or assign to and vest in the purchaser the property sold for all the estate and interest therein of the mortgagor and of which the mortgagor had power to dispose. R.S.O. 1990, c. M.40, s. 28.

Right to title deeds and conveyance of legal estate

29.At any time after the power of sale has become exercisable, the person entitled to exercise the same is entitled to demand and recover from the mortgagor all deeds and documents in the mortgagor’s possession or power relating to the mortgaged property, or to the title thereto, which the person would have been entitled to demand and recover if the property had been conveyed, appointed, surrendered or assigned to and was then vested in the person for all the estate and interest of the mortgagor and of which the mortgagor had power to dispose, and where the legal estate is outstanding in a trustee the mortgagee, or any purchaser from the mortgagee, is entitled to call for a conveyance of the legal estate to the same extent as the mortgagor could have called for such a conveyance if the mortgage had not been made. R.S.O. 1990, c. M.40, s. 29.

Application of Part II

30.So much of this Part as confers a power to sell does not apply in the case of a mortgage that contains a power of sale, and so much as confers a power to insure does not apply in the case of a mortgage that contains a power to insure; nor do any of the provisions of this Part apply to a mortgage that contains a declaration that this Part does not apply thereto. R.S.O. 1990, c. M.40, s. 30.


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Nawel K. Seth, M.A.Sc; MBA; M.V.A.
Broker of Record
Trail Blazers Realty
, Brokerage,
Toronto Tel: 416.630.1999 / 905.660.7999. Toll Free 1.866.890.1999



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