Home Rent to Own | Power of Sale/Foreclosure | Credit Management The Way Canadians Can Become Homeowners | Page 9

GETTING TO KNOW POWER OF SALE IN
CANADA: MAIN ELEMENTS REGARDING
THIS CONCEPT
There are many elements which help us understand its functioning.
When a Canadian vendor is selling the property under Power of Sale,
he/she must pay out all prior encumbrances like mortgages or liens.
However, lets bear in mind, that dealing with mortgages is very tricky,
and POS is not exempt of its effect. For instance, if a house is sold in
Canada under mortgage for the first time, it can employ Power of
Sale by including the bank and fixing the situation. But a second
mortgage of the same property loses the claim and right to Power of
Sale.
Also when the property is on a mortgage, and a Canadian bank sells
it using Power of Sale for a superior price than that of the mortgage,
the remaining money goes to mortgagor/previous owner. This same
argument goes on the opposite direction when, for example, the bank
is unable to sell the property for the price of the debt. Despite selling
using POS, the new buyers will get the property clean of debts but the
bank can sue the previous owners.