Power of Sale vs Foreclosure in Ottawa: What Buyers Need to Know

Jan 6

If you’re browsing real estate listings in Ottawa, you may see homes described as either power of sale or foreclosure. While these terms are often used interchangeably in casual conversation, they are not the same thing, especially in Ontario.

Understanding the difference between power of sale and foreclosure in Ottawa is important for buyers, sellers, and investors alike. Each process comes with different legal implications, timelines, and risks.

The Key Difference at a Glance

In Ottawa and throughout Ontario, power of sale is far more common than foreclosure.

A power of sale allows the lender to sell the property to recover unpaid debt while the homeowner may still retain equity. Foreclosure, on the other hand, results in the lender taking ownership of the property outright.

Most distressed listings in Ottawa are power of sale, not foreclosure.

What Is Power of Sale in Ottawa?

Power of sale is a legal process written into most Ontario mortgage agreements. When a homeowner defaults on their mortgage, the lender has the right to sell the property without going through the court system.

In Ottawa, power of sale properties are typically:

Listed on MLS like regular homes
Sold by banks or lenders
Marketed publicly through real estate agents

The lender’s obligation is to make a reasonable effort to obtain fair market value, not to sell the property at a steep discount.

Importantly, if the sale price exceeds the amount owed, the remaining proceeds may still go to the former homeowner.

What Is Foreclosure in Ottawa?

Foreclosure is a much less common process in Ontario. With foreclosure, the lender takes full ownership of the property after legal proceedings.

Once a foreclosure is complete:

The lender becomes the legal owner
The former homeowner loses all equity
The lender can resell the property at any price

Foreclosures are more common in other provinces, but in Ottawa they are relatively rare and usually occur only in specific legal or financial circumstances.

Why Power of Sale Is More Common in Ottawa

Ontario’s legal framework strongly favours power of sale over foreclosure because it is:

Faster than court-based foreclosure
Less costly for lenders
More transparent for buyers

As a result, most lenders choose power of sale as their primary recovery method, making foreclosure listings uncommon in the Ottawa market.

What This Means for Buyers in Ottawa

From a buyer’s perspective, power of sale and foreclosure can look similar, but the buying experience is different.

With power of sale properties:

Homes are usually sold “as is”
Sellers provide limited disclosures
Banks are often less flexible on conditions
Pricing is often closer to market value

With foreclosure properties:

Title issues require extra legal review
The lender controls the resale completely
The risk profile is typically higher

In Ottawa, buyers are far more likely to encounter power of sale listings than true foreclosures.

Are Foreclosure Homes Better Deals in Ottawa?

Foreclosure homes are often assumed to be better deals, but that is not always true.

Because foreclosure properties are rare in Ottawa, they do not necessarily come with automatic discounts. In many cases, power of sale homes are priced similarly and come with fewer legal complexities.

The real “deal,” if there is one, usually comes from:

Deferred maintenance
Limited competition
Buyers willing to accept “as is” conditions

The label alone does not guarantee savings.

Which Is Riskier: Power of Sale or Foreclosure?

In Ottawa, foreclosure generally carries more legal complexity and risk than power of sale.

Power of sale transactions are more standardized and familiar to real estate lawyers, lenders, and agents. Foreclosures often require deeper legal review and can involve title complications or longer timelines.

For most buyers, power of sale is the more predictable option.

Final Thoughts

In Ottawa, power of sale and foreclosure are not interchangeable terms. Power of sale is the dominant process used by lenders in Ontario, while foreclosure is rare and typically more complex.

For buyers, understanding this distinction helps set realistic expectations around pricing, conditions, and risk. Neither option is inherently good or bad, but each requires a different level of preparation.

Knowing how these processes work in Ottawa is key to deciding whether a distressed property aligns with your goals, budget, and comfort level.