Power of Sale
- The 'power of sale' is the right of the mortgagee (lender) to force the sale of a property without judicial proceeding, should default occur.
- This is the most frequently used method by which a lender will remedy a default by the mortgagor (borrower).
- The term power of sale indicates a sale under the power contained in the mortgage document.
- The lender proceeding pursuant to a power of sale must follow strict rules.
- The lender must send notice to the borrower, stating the amount due & date by which the arrears plus costs must be paid.
- The power of sale can often be the fairest, most inexpensive method to deal with an unpleasant financial circumstance.
- The lender has an obligation to sell the property for the fair market value.
- It allows the lender to retrieve only what it's entitled to and the borrower gets any surplus.
- The lender, who sells a property for less than the outstanding debt, may sue the borrower for the shortfall.
- The lender will give no warranties with respect to the state of the property or even the ownership of any chattels on the property.
- If you are considering purchasing a home being sold by power of sale & have any legal questions about the contract you should speak with your lawyer.