As a full-time Canadian real estate investor, we need to create many opportunities for ourselves on a regular basis. We need to attract sellers that are in particular situations whereby we can help these sellers and to be able to create massive and passive income for ourselves.
The Power of Sale Process in Ontario
The Power of Sale process in Ontario has been created in such a manner as to keep “foreclosure” out of the court system. It has been created in such a manner to allow the lender to get the defaulted loan back to them as quickly as possible. If the lender wants to do this process very quickly, it can take as little as 53 days.
The Power of Sale Process in Ontario is as follows:
Once a mortgage is 15 days in default, the lender issues a notice of sale to the mortgagor. This notice of sale contains a redemption date which is 35 days after the issuance of that document, coupled with one day up front to issue the document and one day a the end, for a total of 37 days, at which time the mortgagee (lender) must sit and wait until the expiration of that said redemption period.
Upon the expiry of the redemption period, the mortgagee (lender) may issue a statement of claim for debt of possession with the courts. What does this mean?
It means they are staking their claim to be able to repossess the property, not to own it, but to be able to sell it or get it sold, in order to be able to capture the debt that is owing.
The defendant then has 20 days at that point to file a statement of defense with the court. This claim can be served personally to an adult member at the household where the default happened, but it must be followed up by a mailed copy addressed to the defendant. So the period for filing a defense could be extended an additional 5 day, so this could be a 25-day process while the lender sits and waits.
If the defendant does file a notice of intent to defend, this period can be extended up to 10 days. If the defendant fails to file a statement of defense, the plaintiff (lender or mortgagee) signs a default judgment with the court at which point a motion record is then prepared to obtain order for leave to issue a writ of possession.
What is writ of possession in Ontario?
The defendant is ordered to leave the property, and writ of possession (right to possess the property) is issued to that lender. If that writ of possession is issued with the court, it is also filed with the sheriff, also known as a bailiff or enforcement officer, in the jurisdiction where the property is located. The sheriff will then arrange for the eviction.
In the next article, I will talk about the advantages and the time-lines that we as investors have to be able to profit on deals like this.
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