Power of Sale Explained in Ontario (Ottawa Buyer Guide)
If you’re house hunting in Ottawa, you may come across listings labeled “power of sale” and wonder what that actually means. Power of sale is a legal process used in Ontario real estate when a homeowner defaults on their mortgage. While these properties can sometimes present opportunities, they also come with specific rules and risks that buyers should understand.
This guide explains how power of sale works in Ontario, what it means for Ottawa buyers, and what to expect before making an offer.
What Is a Power of Sale in Ontario?
A power of sale allows a lender to sell a property when the homeowner fails to meet the terms of their mortgage, most commonly by missing payments. Instead of going through a lengthy court foreclosure process, the lender is permitted to sell the property to recover the outstanding debt.
Power of sale is the most common default process in Ontario, including in Ottawa. It is faster and more common than foreclosure, which is used more often in other provinces.
How Power of Sale Works in Ontario
In Ontario, power of sale follows a defined legal process.
First, the homeowner defaults on their mortgage. After a set period, the lender issues a formal notice giving the homeowner time to bring the mortgage back into good standing. If the issue is not resolved, the lender can proceed with selling the property.
Once listed, the property is typically sold on the open market through MLS, just like a regular home sale. The lender’s goal is to recover the amount owed, not necessarily to maximize profit.
This process applies across Ontario, including Ottawa and surrounding areas.
Power of Sale vs Foreclosure in Ontario
In Ontario, power of sale is not the same as foreclosure.
With a power of sale:
The lender sells the property on the open market
The original homeowner may still be entitled to remaining proceeds after debts are paid
The process is faster and more common
With foreclosure:
The lender takes ownership of the property
The homeowner loses any remaining equity
The process is rare in Ontario
Most distressed listings you see in Ottawa will be power of sale, not foreclosure.
Are Power of Sale Homes Cheaper in Ottawa?
Power of sale properties are often assumed to be deeply discounted, but that is not always the case.
In Ottawa, many power of sale homes are priced close to market value, especially in competitive neighbourhoods. Lenders are required to make a reasonable effort to achieve fair market value, which means underpricing is not guaranteed.
Where buyers may see value is in:
Homes needing cosmetic or deferred maintenance
Properties that have sat vacant
Listings with less flexibility on closing or conditions
Savings, when they exist, usually come with trade-offs.
Important Risks Buyers Should Know
Buying a power of sale property in Ottawa comes with additional considerations.
Most power of sale homes are sold “as is, where is.” This means:
The seller may not agree to repairs
The seller may limit representations and warranties
Utilities may be disconnected
The property may have been vacant for some time
Inspections are still possible in many cases, but buyers should expect less cooperation than in a traditional sale.
Legal review is especially important with power of sale transactions.
Financing a Power of Sale Property in Ontario
In most cases, buyers can finance a power of sale property with a standard mortgage. However, lenders may require:
A larger deposit
Shorter condition periods
Firm financing approval
If the home is in poor condition, financing may be more difficult, particularly with insured mortgages.
Working with a mortgage broker early is strongly recommended.
Where Power of Sale Homes Appear in Ottawa
Power of sale listings can appear anywhere in Ottawa, but they are more common in:
Higher-turnover neighbourhoods
Areas with newer developments
Markets experiencing short-term financial pressure
They are not limited to distressed areas and can appear in both suburban and central neighbourhoods.
Is Buying a Power of Sale Right for You?
Power of sale properties can make sense if you:
Are comfortable with limited seller disclosures
Have financial flexibility for repairs
Understand the legal process
Are working with experienced professionals
They may not be ideal if you:
Need extensive seller cooperation
Require repairs before closing
Are buying with minimal financial buffer
These properties reward preparation more than speed.
Final Thoughts
Power of sale is a common and legitimate part of Ontario’s real estate system. In Ottawa, these homes are usually sold through the MLS and follow a clear legal process, but they require buyers to be informed and cautious.
A power of sale property is not automatically a deal, and it is not automatically a risk. Understanding how the process works in Ontario is the key to deciding whether it fits your goals and comfort level.
