Judicial Sale and Foreclosure Actions:

Mortgage actions taken by mortgagees typically involve suing for payment and possession, along with further action to foreclose or sell the property. A judicial sale requires the Court sale of the property with proceeds applied to the mortgage debt. The mortgagee must make application to the Court to sell the property. If a deficiency arises, the mortgagee can obtain judgment under the personal covenant to pursue the mortgagor. If an excess results, the amount is returned to the mortgagor following disbursements.

Judicial sale is not a popular action in Ontario as lenders prefer power of sale given speed and lower costs.

A foreclosure action can be commenced immediately on payment default and represents an action to remove the mortgagor's and subsequent encumbrancers' equity of redemption. Upon final order of foreclosure, equitable rights of all subsequent encumbrancers are extinguished leaving the mortgagee taking the action with title to the property. As with the judicial sale, the action is governed by the Rules of Civil Procedure.

The foreclosure process is initiated with a statement of claim. The mortgagor is entitled to file a request to redeem, thereby allowing 60 days to redeem the property. The mortgagor also has the right to request a conversion from foreclosure to a judicial sale action, referred to as a request for sale. However, a provision exists in the Rules of Civil Procedure to convert the judicial sale procedure back to foreclosure if insufficient funds are available to pay the mortgagee.

Assuming that neither a request to redeem or a request for sale is made, a final order of foreclosure is issued. A judgment of final foreclosure is registered against the property title in the land registry office. This action effectively discharges any interests of subsequent encumbrancers in the land.

Foreclosure procedures are very complex.

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