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Foreclosure Proceedings in Canada


In the context of Canada foreclosure, a lender can retrieve a certain mortgage debt in two primary ways, when a borrower fails to pay. The two ways are power of sale and judicial sale.

Judicial Sale and Power of Sale

A judicial sale is a type of sale which is conducted under the authority as well as supervision of the court. In this case, a lender is bound to apply to the court in order to get its permission for selling the foreclosed property. On the other hand, the second method that is power of sale helps the lender in selling the property without involving the court. The lender gets the right to sell off the home from the mortgage document or from the provincial legislation, which authorizes power of sale in that particular province in Canada.

In Prince Edward Island, Newfoundland, Ontario, and New Brunswick, the method of power of sale is employed as the primary recovery method for the lender. On the other hand, the method of judicial sale has been embraced as the chief debt recovery vehicle in Alberta, Quebec, British Columbia, Manitoba, and Saskatchewan. In Nova Scotia, the main recovery process is known as Mortgage Foreclosure and Sale or Mortgage Foreclosure, but it is regarded as judicial, since the court is involved.

Differences Between Judicial Sale and Power of Sale

Let us look at the central differences between judicial sale and power of sale. The court is involved extensively in the judicial sale provinces while there is almost no court involvement in case of the power of sale provinces. In judicial sale provinces, the court orders the property to be sold, confirms sale procedure after it takes place, and it even hears an application for deficiency judgment. This is first difference between the two.

The second difference exists in the manner in which the process begins. In case of the power of sale provinces, a notice is sent to the borrower, while the current owner of the property or home begins the process. In case of judicial sale, a lawsuit against the involved borrower as well as others are liable, begins the process.

You can notice the third difference in the manner in which any deficiency judgment is attempted. A lender who seeks a deficiency judgment has to begin an action against the involved borrower after the property is sold, in power of sale provinces. On the other hand, the deficiency judgment action begins as part of the primary action of the borrower in case of judicial sale provinces.

Six provinces actually practice judicial sale procedures primarily but the procedures of judicial sale differ from one province to another. The process in Nova Scotia combines both the practices, and that, which is original to the province. In Alberta and Manitoba, a Canada foreclosure order given by the court can only be called for after the mortgaged property was given for sale in a public auction. Appropriate notice also has to be given, and you can request the court order only if the highest bid was not enough to eliminate the mortgage debt.

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