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clients across Canada since 1987

Dec 26, 2020


In POST XXXI (part 1 of this Series) I introduced a private mortgage power of sale fact scenario that landed on my desk last September  of 2020. After issuing a demand letter I tried to take possession of 2 residential rental properties in downtown Toronto. One property was an AirBNB rental with 4 units and the other was a condominium unit in a multi-unit residential building.

I was unable to take possession of the 2 properties, partially because of everyone’s pandemic paranoia (which was completely understandable) and partially because the owner/mortgagor did his best to prevent the property manager hired for the task from completing his mandate.

Determined to find a successful solution and help my client get her 2 private mortgages that were in default repaid in full, I searched for an alternate strategy. I ultimately decided that this borrower/mortgagor would have to be forced into a corner in order for the mortgagee to successfully complete her power of sale action and leave the borrower/mortgagor with no option but to repay her. We had to pressure the owner/mortgagor to pay. This was not going to be quick or easy. The strategy that I ultimately decided upon was this; we would hit the borrower/owner hard on three fronts:

  • first we would start a power of sale action in the courts and sue the borrower/mortgagor both for the money owing under the mortgages and for possession
  • then we would issue and serve a notice of sale and wait the required 35 clears days (called the redemption period) before taking the last step
  • third, we would then list both properties for sale on the local Toronto MLS - even though we did not have possession

As luck would have it, we were able to issue and serve the statement of claim on the owner/mortgagor immediately. Then, a day or two later, we issued and served a notice of sale, giving the owner/mortgagor a 35 day period to redeem the 2 mortgages. Finally, we started the process of listing the property for sale. In order to determine just what an appropriate list price would be, we thought it best to appraise both properties. And who better to complete the appraisal at this time than the appraiser who appraised the property at the time of the approval and funding of the mortgage loan transactions?

The mortgagee found the appraisals that had been given to her by the owner/mortgagor and sent them off to the appraiser and asked the appraiser to quote for updating the appraisals. The response that we got from the appraiser was truly shocking. More in the next postAs always, this blog is intended for information purposes only. It is not legal advice and cannot be relied on as such. Nor is it a substitute for hiring your own legal counsel, who will be an essential member of your mortgage default and mortgage remedy team. And lastly, this blog is just my opinion. I reserve the right to change my mind. And I reserve the right to be wrong.

Be well and stay healthy.