The Duties of a Mortgagee under a Power of Sale in Ontario

The duties of a mortgagee acting under a power of sale in Ontario are:

1. A mortgagee selling under a power of sale is under a duty to take reasonable precautions to obtain the true market value of the mortgaged property at the date on which the mortgagee decides to sell it. This does not mean that the mortgagee must , in fact, obtain the true value.

2. The duty of the mortgagee is only to take reasonable precautions. Perfection is not required. Some latitude is allowed to a mortgagee.

3. In deciding whether a mortgagee has fallen short of its duty, the facts must be looked at broadly and the mortgagee will not be adjudged to be in default of it’s duties unless it is plainly on the wrong side of the line.

4. The mortgagee is entitled to exercise an accrued power of sale for its own purposes whenever it chooses to do so. It matters not that the moment may be unpropitious and that by waiting, a higher price could be obtained.

5. The mortgagee can accept the best price it can obtain in an adverse market provided that none of the adverse factors are due to fault on it’s part.

6. Even if the duty to take reasonable precautions is breached, the mortgagor must show that a higher price would have been obtained but for the breach in order to be compensated in damages. *

William Poulos, Barrister
* This blog is not a substitute for legal advice. Should you require legal advice, a lawyer should be consulted to advise on the specific circumstances of your case.

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