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Everything About The Execution Of Power Of Sale


Power of Sale is an important tool or a remedy for lenders but how is it effectuated? We shall discuss the execution of the Power of Sale in this blog. To begin with the fine print of the mortgage contract needs to be read. There are times when the lender does not instantly acquire the power of sale. This means he may have to give a notice of default to the borrower along with a time period within which the borrower has to make amends to the default i.e. pay what is due. This time period within which the borrower needs to pay his dues can also be extended at times, and this has to be within a fair time frame needed to make amends to the default. The extension is usually required when the borrower needs to make non-financial amends such as repair work on the property. It becomes the lender's responsibility before executing the power of sale to ensure that he has given all notices required to the borrower and all timelines have lapsed. Statutory Notice Periods If the default made by the borrower is such that the lender can proceed with the power of sale, he needs to first meet certain notice requirements under law. These are as follows: Under Section 32 of the Mortgages Act (Ontario), the default should be for a continuous period of 15 days for the lender to be able to exercise the power of sale. He cannot make the sale for 35 days after giving the notice of default to the borrower. But no such notice must be made if the mortgage loan has been given to secure the issuance of bonds or debentures. As per Section 244 of the Bankruptcy and Insolvency Act (Canada), a secured creditor who wants to enforce its security on all or substantially all of the inventory, accounts receivable or other property of a borrower who is insolvent is needed to send a notice of intention to enforce its security to that person if the assets that are the subject of the enforcement proceedings have been acquired for or used in relation to a business carried on by that person. Barring some exceptions, the enforcement of the lender's security cannot be done for a period of 10 days after the notice of intention to enforce it has been sent. Though it seldom happens that a mortgage contract does not have the conditions related to the power of sale, but if it doesn't, then, the lender needs to turn to the statutory power of sale provisions laid out in Part II of the Mortgages Act (Ontario). If you want to know more about your rights when a lender applies the power of sale, or other aspects of this tool, write to us at LendX Financial in Brampton, Greater Toronto Area.

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