When the market gets tougher and headlines start talking about mortgage stress, more buyers start asking the same question:

“Should I look for a deal with a power of sale?”

In Windsor and Essex County, those three words can spark a lot of curiosity – and a lot of confusion. Power of sale properties are often seen as hidden bargains, bank fire-sales, or “easy flips.” In reality, they are highly regulated, and buyers need to understand the facts before jumping in.

This blog breaks down how power of sale works in Ontario, common buyer misconceptions, and how a local team like The Dan Gemus Real Estate Team helps you navigate the risks and opportunities.

What Is a Power of Sale in Ontario?

In Ontario, most distressed sales are handled through power of sale, not foreclosure. A power of sale is a legal remedy under Ontario’s Mortgages Act that allows a lender (the mortgagee) to sell a property when a borrower (the mortgagor) defaults on their mortgage, without the lender taking title and without going through a full court foreclosure process.

Key points:

• The lender is given the right to sell the property to recover what is owed

• The legal framework comes from the Mortgages Act, R.S.O. 1990, c. M.40

• Power of sale is generally faster and less costly than foreclosure, which typically involves full court proceedings and transfer of title to the lender

In a power of sale:

• The lender forces the sale

• Sale proceeds pay the debt, interest, and costs

• Any surplus after all debts and costs are paid must be returned to the homeowner

If there is a shortfall (the sale does not cover everything owed plus costs), the lender can still sue the borrower for the balance.

How the Power of Sale Process Works

The process is technical and time-sensitive. Broadly, here is how it works in Ontario:

1. Default occurs
   Default usually means the borrower has failed to meet mortgage terms, most commonly missed payments.

2. 15-day waiting period
   Under the Mortgages Act, the lender must wait at least 15 days after default before issuing a formal Notice of Sale.

3. Notice of Sale and redemption period
   A Notice of Sale is sent to the homeowner and others with an interest in the property (such as subsequent mortgagees or lien holders), as required by section 31 of the Mortgages Act.

   • The notice includes details of the mortgage, the amount in default, and a date by which the mortgage can be brought back into good standing

   • There is typically a 35-day redemption period during which the borrower can pay what is owed (plus costs) and stop the power of sale process.

4. Property is marketed and sold
   Once the redemption period expires and the borrower has not cured the default, the lender can proceed with the sale.

   • The lender must act in good faith and take reasonable steps to obtain fair market value for the property

   • There are guidelines around proper exposure, such as listing on MLS and marketing for a reasonable time, often referenced in OREA guidance to registrants

5. Closing and distribution of funds
   At closing, the mortgage debt, interest, legal fees, and other enforcement costs are paid out of the sale proceeds. Any remaining funds go back to the homeowner. If there is a shortfall, the lender may pursue the borrower for the difference as an unsecured claim.

There are also restrictions on who can buy: for example, a mortgagee exercising a power of sale cannot sell the property to itself.

Common Buyer Misconceptions About Power of Sale Properties

Because these homes are tied to distress and default, there are a lot of myths. Here are the most common misconceptions we hear from buyers in Windsor and Essex County.

Misconception 1: “Power of sale means a massive discount. The bank just wants its money back.”

Reality: Lenders exercising power of sale are required to try to obtain fair market value and act in good faith. If they sell far below market without reasonable exposure or effort, the former owner can sue for the lost equity.

That means:

• The lender is not supposed to “dump” the property for far less than it is reasonably worth

• The listing brokerage will typically market it much like any other property (MLS exposure, signage, advertising)

Yes, there can be opportunities, especially if the home needs work or has been mismanaged, but the law does not support “fire-sale pricing” just to clear the file quickly.

Misconception 2: “The bank must fix problems or guarantee the condition.”

Reality: Power of sale properties are often sold as is, where is, with very limited warranties from the seller (the lender). The seller is selling “as is” and does not guarantee the inclusion or condition of any chattels or fixtures.

That typically means:

• No seller declaration about the property’s history

• No guarantee that appliances, mechanical systems, or even certain fixtures will be present or working on closing

• The buyer bears the responsibility to investigate zoning, permits, renovations, and any outstanding work orders

In a region like Windsor–Essex, where properties range from historic homes to rural acreages and lakefront cottages, that “as is” factor matters. Hidden issues with foundations, septic systems, older wiring, or unpermitted additions can be very expensive.

Misconception 3: “Power of sale is only for investors or flippers.”

Reality: The rules do not restrict power of sale properties to investors. Owner-occupiers can absolutely buy them, provided they qualify for financing and understand the risks.

However, it is fair to say power of sale is not beginner-friendly. Many lenders and industry guides note that while power of sale can lead to good deals, these transactions are complex and carry unique risks, making them better suited to informed buyers who have strong professional support.

Misconception 4: “If I get a home inspection, I am fully protected.”

Reality: An inspection is crucial, but it is not a guarantee. Power of sale sellers typically:

• Refuse to give representations or warranties about the property

• Often will not do repairs identified during inspection

• May limit access to the property, especially if it is occupied

Your inspection helps you understand what you are buying, so you can decide whether the risk and cost of any repairs are acceptable. It does not turn the transaction into a conventional, warranty-heavy sale.

Misconception 5: “The bank will be flexible on closing dates and conditions.”

Reality: Lenders selling under power of sale usually work within strict internal procedures and timelines. Once they accept an offer:

• They expect the buyer to meet the agreed closing date

• They frequently resist extensive amendments or delays

• They rely on specially drafted power of sale clauses that can be different from typical residential sellers’ clauses

This is why having an experienced real estate lawyer and a Realtor who understands power of sale wording is essential, especially in a time-sensitive market.

Misconception 6: “All power of sale properties are fixer uppers.”

Reality:  Not all power of sale homes are run down or in need of major renovation. The legal trigger for power of sale is mortgage default, not the physical condition of the home. Default can happen for many reasons: job loss, illness, divorce, rising debt, or other financial pressures. None of those automatically mean the owner stopped maintaining the property.

In Windsor and Essex County, we regularly see a range of conditions:

• Some homes are dated or have deferred maintenance

• Some are average, lived-in family homes

• Occasionally, you find properties that are quite well kept but the owners simply ran into financial difficulty

The key takeaway for buyers is this:

• Do not assume every power of sale is a “gut job”

• Do not assume it is “turnkey,” either

Real Risks Buyers Need to Understand

Beyond the myths, there are real, fact-based risks:

1. Limited disclosure
   You often do not get a detailed history of the home’s issues, renovations, or past insurance claims.

2. As-is condition
   The seller likely won’t repair anything uncovered by inspection, and the property could have deferred maintenance or damage that the prior owner could not afford to fix.

3. Title and lien complexity
   Your lawyer must verify that all registered interests can be dealt with from the sale proceeds and that you receive clear title. The Mortgages Act requires proper notice to all interested parties, but that does not remove the need for a thorough title search.

4. Occupancy issues
   In some cases, the property may still be occupied by the former owner or a tenant. Vacant possession and eviction timelines can add complexity and cost.

5. Financing challenges
   Some lenders are more cautious about financing distressed or heavily damaged properties. If the home is not in liveable condition, conventional financing can be difficult.

Where The Dan Gemus Real Estate Team Fits In

Power of sale properties in Windsor and Essex County require a combination of local knowledge and technical understanding of the legal framework. That is where our team steps in.

Here is how The Dan Gemus Real Estate Team helps protect buyers:

• Local market insight
  We understand true fair market value in communities across Windsor, LaSalle, Amherstburg, Essex, Kingsville, Leamington, Lakeshore, Tecumseh, and Belle River. That helps you separate a “deal” from a “money pit.”

• Experience with complex clauses
  We work with the power of sale schedules and lender-specific clauses used in Ontario, and we coordinate closely with your lender and lawyer so you know exactly what you are signing.

• Risk-focused strategy
  We encourage full due diligence: inspections, lawyer review, and a realistic budget for repairs and surprises. In a tougher market, the best opportunities are the ones that still make sense after you factor in risk.

• Straightforward guidance
  We are not here to oversell power of sale as a magic shortcut. For some buyers, these properties make strategic sense. For others, a conventional listing is a better fit. Our job is to walk you through both options with clear, honest information.

Should You Consider a Power of Sale Property?

Power of sale properties can be:

• A way to access a home that might otherwise be out of reach

• An opportunity for experienced buyers who are comfortable with risk and renovation

• A poor fit for buyers who need maximum certainty, predictability, and warranties

If you are curious about power of sale homes in Windsor–Essex, the right next step is not to start making blind offers. It is to have a focused conversation about your goals, your risk tolerance, and your financing.

The Dan Gemus Real Estate Team can help you:

• Understand whether power of sale aligns with your situation

• Review current opportunities across Windsor–Essex

• Build a plan that balances value with protection

 

The Dan Gemus Real Estate Team Ltd., Brokerage is a top trusted voice in real estate, serving all of Windsor and Essex County, ON with their real estate needs –  Learn more at: www.DanGemus.com.

*This blog is for informational purposes only and is in no way intended to replace legal, accounting, tax, or environment advice, nor is it intended to solicit those under contract with another Brokerage.