A few weeks ago, I blogged about one of the key differences between taking security in Canada as compared to the US, which is a question I’m often asked by lenders when working on cross-border transactions. As a follow up to that post, I’m going to discuss one other reason why lender rights are generally a bit more robust in Canada than in the US: the option of private power of sale that’s available in Ontario.
A private power of sale in Ontario allows a lender to (on not less than 15 days after default and 35 days’ notice) sell the property it has taken security over without having to go through a foreclosure procedure — i.e., without any judicial intervention! In the US, the remedies essentially always include a foreclosure remedy, which results in at least some level of judicial intervention. As such, the private power of sale proceeding is a very attractive remedy for many real estate lenders in Ontario.
In addition, in Ontario and all other Canadian common law jurisdictions (every province other than Quebec, which has its own unique system), foreclosure and judicial proceedings are available. In most cases these are great options for lenders, as they are judicially supervised and free the lender from liability (or action from the debtors) with respect to the quantum of sale proceeds. These proceedings also tend to be completed in a fraction of the time a similar process might take in the US, which is another very attractive feature of the Canadian real estate lending market.