In recent months, Power of Sale properties have drawn increasing attention from buyers across Ontario. Competitive pricing, strong locations, and the perception of “below-market value” have made these listings particularly appealing in a cautious market environment.
Yet while Power of Sale homes can offer meaningful opportunities, they also involve a different risk profile than traditional residential transactions. Understanding how these sales work — and where the risks lie — is essential before moving forward.
Why Buyers Are Paying Attention to Power of Sale Properties
Power of Sale transactions typically occur when a homeowner defaults on their mortgage, and the lender exercises its legal right to sell the property to recover the outstanding loan balance.
Importantly, many of these homes are not distressed in quality. Some are located in established neighbourhoods, desirable school districts, or areas with strong long-term fundamentals. For buyers with the right strategy, Power of Sale properties may offer:
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A lower entry price compared to similar market listings
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Potential rental income opportunities
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Long-term appreciation if acquired at the right basis
However, the pricing advantage exists precisely because additional risks are transferred to the buyer.
Understanding the Key Risks
1. Limited Representations on Property Condition
In a Power of Sale transaction, the seller is typically a financial institution. Unlike individual homeowners, lenders do not occupy the property and make no representations about its condition.
Contracts almost always specify that the property is sold “as is, where is,” with no warranties regarding defects, past damage, or environmental concerns. Any deterioration, deferred maintenance, or damage becomes the buyer’s responsibility upon closing.
Best practice:
A professional home inspection and carefully drafted conditions are critical wherever possible.
2. Additional Costs Beyond the Purchase Price
The list price alone does not always reflect the total cost of acquisition. Depending on the property and buyer profile, additional expenses may include:
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Harmonized Sales Tax (HST), particularly on newer or substantially renovated properties
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Vacant home or municipal vacancy-related taxes
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Non-Resident Speculation Tax (NRST), where applicable
Failing to account for these items can materially alter the investment outcome.
Best practice:
Have all tax implications reviewed in advance by professionals familiar with Power of Sale transactions.
3. Contract Terms That Heavily Favour the Seller
Power of Sale agreements often include extensive disclaimer clauses in Schedule A, limiting the seller’s liability and flexibility. These clauses may exclude responsibility for zoning compliance, unpermitted renovations, environmental conditions, or even the final condition of the property at closing.
While these terms are standard, they require careful legal review.
Best practice:
Work with a real estate lawyer experienced in lender-driven transactions and avoid unconditional offers unless the risks are fully understood.
4. Tenant Occupancy Complications
Some Power of Sale properties are sold with tenants in place. In these situations, the lender may not have access to complete lease documentation, and tenant cooperation cannot be assumed.
For buyers intending to occupy the property, Ontario’s tenant protections can significantly impact timelines and outcomes.
Best practice:
Confirm occupancy status early and ensure possession terms are clearly addressed before committing.
5. Transaction Timing and Closing Uncertainty
Unlike conventional sales, Power of Sale transactions may be subject to internal lender approvals or legal developments involving the original borrower. In some cases, closing dates may be delayed or transactions terminated if the default is resolved.
Best practice:
Maintain flexibility in financing and housing plans until the transaction is firm and legally secure.
Final Perspective
Power of Sale properties can provide meaningful value — but only when approached with proper due diligence and realistic expectations.
They are best suited for buyers who:
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Understand contractual and legal complexity
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Have access to professional advice
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Can accommodate uncertainty in timing and condition
When evaluated carefully, these homes can represent solid long-term opportunities. When approached casually, they can introduce avoidable risk.
If you are considering a Power of Sale property and would like a professional assessment of a specific listing, our team is happy to provide guidance tailored to your objectives.
Contact The Fisher Group – Your Real Estate Experts in Oakville and the GTA
Fisher Yu
📱 647.598.8488
📧 [email protected]
🌐 thefishergroup.ca
