Commercial Litigation Insights: Power Of Sale vs. Receivership: A Comparative Guide

Both a power of sale and a receivership can be used by mortgagees to sell land to recover unpaid debts. However, that is where the similarities end. These are very different tools to achieve a similar purpose. How are these tools different, and when is it best to use each?

1. Starting the Process

Typically, a mortgage will contain clauses that give the mortgagee the power to appoint a receiver and the power to sell the property. In addition, both the Mortgages Act¹ and the Bankruptcy and Insolvency Act ("BIA")² contain clauses that give the mortgagee the power to sell the property and the power to appoint a receiver.

To sell, the mortgagee must first wait at least 15 days after default, then give at least 35 days' notice in the prescribed form.³ Once the 35 days pass, the mortgagee can start its sales process and, when a purchaser is identified, sell the property.