What's a Power of Sale?

The 'power of sale' is the right of the mortgagee to force the sale of a property without judicial proceeding, should default occur. This is the most frequently used method by which a mortgagee (usually a financial institution) will remedy a default by a mortgagor (the borrower/owner).  The term power of sale indicates a sale under the power contained in the mortgage document or in the Mortgages Act.

The power of sale can often be the fairest, most inexpensive method to deal with an unpleasant financial circumstance.  It allows the mortgagee/lending institution to retrieve only what it's entitled to and no more.  If there is a surplus, then the owner/mortgagor will benefit.  The power of sale represents certain complexities, particularly in terms of gaining possession and the obligation of the mortgagee to obtain the best possible value.