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May 02, 2021

THE NEW REALITY: PRIVATE MORTGAGE DEFAULTS - POWER OF SALE & FORECLOSURE - Part XLIV of a Series –Litigation as a power of sale remedy part 4

Post XLI was the beginning of an in depth look at power of sale litigation. The previous Post XLIII looked at the requirements of the statement of claim. In this post, I will answer the question, who should the mortgagee sue?

It’s not always an easy question to answer. Obviously, when the mortgaged property is owned by one or two (or more people or corporations) and each of those owners signed the mortgage document, then each must be sued in the power of sale litigation. This is vitally important because a mortgagee cannot get a writ of possession from the courts unless the mortgagee has obtained a judgment for possession from ALL of the mortgagors.

But sometimes, the property may be owned by one person (let’s say, Mr. Smith) who mortgaged the property. But then, after the mortgage was registered, Mr. Smith may have transferred the property to another party, say, Mrs. Smith. Or Mr. Smith may have transferred the property to himself and to Mrs. Smith. Who, then, should the mortgagee sue?

The answer is simple. The mortgagor must sue all of the current registered owners of the mortgaged property if the mortgagee wants to obtain a writ of possession from the courts. But what about the situation where the mortgagor (the party who signed the mortgage) is no longer an owner of the property? 

Again, the mortgagee will want to sue the current owners to be certain that it will be able to get a writ of possession from the courts. However, the mortgagee may also sue both the current owners and the original mortgagor in the same statement of claim. But with a big caveat (qualification). Which I will discuss in the next post.

As 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 power of sale 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.