Offices in Ottawa and Perth
(613) 722-1500

CONTACT US (613) 722-1500

Buying a Home Under Power of Sale? Proceed with Caution

Buying a Home Under Power of Sale? Proceed with Caution


Mann Lawyers

Posted March 31, 2021

With the price inflation in today’s current market resulting in homes becoming unaffordable for many, Buyers are turning to properties being sold under power of sale.  While purchase prices on power of sale properties may be appealing, especially in this market, there are risks, clauses and conditions associated to proceeding with this type of purchase that Buyers should be aware of.

What is a power of sale ?

A power of sale occurs when the owner(s) of a home have defaulted on their mortgage. When owners default on their mortgage, the Lender (Bank) can force the sale of the home to recover the outstanding amount of the mortgage.

What is unique about purchasing a power of sale property?

When purchasing a power of sale property, the Lender (Bank) will include clauses and conditions in the Agreement of Purchase and Sale that are not typically found in standard purchases. These unique clauses and conditions that can be found in these Agreements include, but are not limited to:

  1. Right of Redemption

A Lender may include a clause in the Agreement that stipulates that the owner/borrower of the property is at liberty to bring the mortgage back in good standing at any time before the closing date. The owner/borrower would then be able to keep the property.  Buyers therefore need to be aware that there is a risk that they lose the opportunity to purchase the property on the day of closing, despite the fact that there is a binding Agreement of Purchase and Sale between the Buyer and the Lender in place.

  1. State of Property

As the Lender (Bank) typically has not resided in the property, it will not provide any assurances as to the state of the property on closing. Buyers purchasing a power of sale property, are purchasing the property in an “as is” condition. It is therefore recommended that the Buyers make their offer conditional upon a home inspection, so that they can be made aware of any issues at the property.

  1. No Warranties or Representations on Chattels

The Lender (Bank) will not make any warranties or representations regarding the condition, or even the ownership, of any chattels (for example: appliances) that may be found at the property. If Buyers proceed with purchasing a power of sale, they accept the risk that the chattels that they may have seen during their viewing of the property may no longer be at the property on closing. Further, following closing, it is possible for a third-party to retrieve possession of the chattels or claim payment of the chattels, if the chattel was financed.

Retain a lawyer!

Buying a power of sale property has its unique features. Buyers are cautioned to make an offer without seeking property legal advice.

This blog post was written by Stephanie Simard, a member of the Real Estate and Family Law teams.  She can be reached at 613-369-0385 or at

More Resources

Blog |
Environmental Law


Posted March 23, 2023

On Friday, March 10, 2023, the Ontario government released two proposals in respect of additional changes to the province’s Environmental Assessment Act, R.S.O. 1990, c.[...]
Blog |
Real Estate


Posted March 15, 2023

Clients often have a lot of questions about the purchase process, such as ‘when do I get my keys’ and ‘will we meet in person[...]
Blog |
Family Law


Posted March 13, 2023

Registering the birth of a new baby can be done online through the Service Ontario website. With the province’s ‘5-in-1 Newborn Bundle,’ you can register[...]
Blog |
Estate Litigation


Posted March 7, 2023

As is now clear, the traditional approach in estate litigation that “the costs of all parties are ordered payable out of the estate has been[...]
Blog |
Employment, Labour, and Human Rights


Posted February 21, 2023

The recent Ontario decision, Steele v. The Corporation of the City of Barrie, 2022 ONSC 7245 (“Steele”), has expanded on the case law centering on[...]
Blog |
Family Law


Posted February 14, 2023

The short answer is yes. The long answer is, it’s complicated. Children have a legal right to be heard and listened to according to the[...]

Subscribe to Our Newsletter

"*" indicates required fields

This field is for validation purposes and should be left unchanged.