Steps In A Power Of Sale

As a commercial mortgage lender you generally prefer the avoidance of enforcement. However, one must hope for the best and plan for the worst.

The following are the basic steps in the most common form of mortgage loan enforcement – power of sale. The steps below are meant as a brief outline of the power of sale process, however, bear in mind that there are various nuances and options at each stage of the process and proper legal counsel should be retained to guide you through and advise on the various matters involved.

Step 1: Initial Demand for Payment

The power of sale process starts when the borrower breaches the mortgage terms. The lender issues a Notice of Default or Demand Letter, giving them a chance to remedy the default. Section 42 of the Mortgages Act precludes the lender from commencing further enforcement proceedings during the demand period specified for payment.