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Oct 25, 2022

THE NEW REALITY: PRIVATE MORTGAGE DEFAULTS - POWER OF SALE & FORECLOSURE - Part LXXXI of a Series – Is Ontario still a Self-Help Remedy Jurisdiction – part 7

In my previous post LXXX I explained the Court of Appeal’s rationale in its Hume decision (at 2022 ONCA 575) for allowing a mortgagee to take possession of mortgaged property without a court order and without a writ of possession. In this post, I will look at the specific rules imposed on a mortgagee who wants to take possession of mortgaged property.

First, we must recognize (and I repeat) the centuries old common law rule that allows a mortgagee to take possession of mortgaged property following default under a mortgage, so long as the mortgagee takes possession peaceably (or peacefully). 

With that general rule in mind, your lawyer must then carefully review the mortgage contract itself to see if there are any provisions requiring the mortgagee to wait a certain number of days after default before taking possession. If the mortgage requires default to have been in existence for a specified number of days, then that waiting period must strictly be followed. Similarly, if the mortgage contract itself requires the mortgagee to give the mortgagor a specific number of days’ notice before taking possession, then the mortgagee absolutely must give the mortgagor that notice.

These are the statutory requirements imposed by the Land Registration Reform Act on every mortgagee whose mortgage does not exclude the covenants that this statute deems to be included in every mortgage.

Lastly, the Hume decision confirms that the common law only places one condition on a mortgagee when taking possession, and this condition is that the mortgagee must take possession peaceably. And at a minimum, the Court of Appeal said that: “.....taking peaceable possession means taking possession of a property without violence or the threat of violence; in other words, without engaging in behaviour that is contrary to the Criminal Code. Such conduct is self-evidently not peaceable”.

It really is that simple.

The next post will look at various types of properties and delineate when possession may be taken without a Court Order or a Writ of Possession for each type. Meanwhile, 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 power of sale and mortgage default 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. Feel free to call me .... 416.662.9550 to discuss.

Be well and stay healthy


P.S. previous posts dealing with self-help remedies in mortgage remedy and power of sale enforcement include Post XXI and Post XXX and Post LXXIII and Posts LXXV, LXXVI and LXXVII and LXXVIII and LXXIX and LXXX