Power of Sale Clause Ontario: What Your Buyer Gives Up

Published 11 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty

Last updated 11 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke · For Ontario registrants · 9 min read

The short answer

MORT/POS-1 (Power of Sale — General Provision) is not a discount clause. It is a list of protections your buyer is giving up. In a single provision the buyer accepts the property as is with no representations about its condition or about what chattels and fixtures are even included, accepts that the seller will leave its own security and every junior claim exactly where they sit on title, accepts a statutory declaration as the only evidence of default it may require, and accepts that the borrower can redeem right up to the point the conditions are satisfied or waived — at which point the deal simply ends. Agents sell the price and skip the paragraph. The paragraph is the price.

The part nobody reads out loud

A buyer wins a power of sale property under asking, tells everyone they got a deal, and spends six weeks planning a renovation. Eleven days before closing the borrower refinances, redeems, and the agreement is at an end. The deposit comes back. The inspection fee, the lawyer’s retainer, the appraisal, the rate hold, the movers and the six weeks do not.

That outcome is written into the clause your buyer signed. It is not a loophole, it is not an unfair surprise, and it is not something to argue about afterwards. It is the deal your buyer agreed to, and the only question that matters professionally is whether they understood it when they signed.

Power of sale files are not complicated. They are simply asymmetric. The seller is a lender enforcing a security interest, it knows almost nothing about the house, it will not warrant anything, and it has built a document that moves risk to the buyer in exchange for the price. Your job is to make that trade visible.

The short version

On a power of sale your buyer trades protections for price. No condition warranties, no assurance about what stays in the house, no obligation on the seller to clear subsequent encumbrances, limited proof of the right to sell, and a borrower who can end the whole thing by paying off the debt. Say all of that to the client before the offer goes in, in writing.

What MORT/POS-1 actually does

The clause does five distinct things, and I find agents understand one or two of them. Get your own copy from your OREA member materials and read it in one sitting rather than skimming the middle, because the middle is where most of it lives.

It states the default and limits the proof. The agreement records that a default exists which has opened up the seller’s right to sell, and it caps what the buyer may demand as proof: a statutory declaration from the seller setting out the underlying facts, the particulars of the notice given, who was served, and that the default ran through to closing.
It preserves the borrower’s right to redeem. The buyer acknowledges that the borrower may still pay off the debt and recover the property right up to the point at which the rights of termination are waived or lapse, or the conditions are met, and that the agreement is subject to that. If redemption happens, the agreement is null and void and the deposit is returned.
It gives the seller an exit if a court intervenes. Where a court prevents completion, by injunction or otherwise, the seller is not obliged to complete, the agreement terminates, and the deposit goes back — with the seller expressly taking no responsibility for the buyer’s costs, expenses or losses.
It relieves the seller of clearing encumbrances. Whatever else the agreement says, the seller takes on no obligation to clear its own security, or anything ranking behind it — later charges, liens and other registered claims stay where they are.
It sells the property as is. No representations or warranties about the state of repair, about chattels or fixtures being included, or about who owns the appliances. The seller is not obliged to remove anything left behind. And the clause makes Ontario’s mortgages legislation override anything in the agreement that conflicts with it.

Read as a whole, the provision converts an ordinary agreement of purchase and sale into something much closer to an assignment of risk. That is a legitimate commercial arrangement between sophisticated parties. It becomes a problem only when one of the parties is a first-time buyer who was told the property was a bargain.

What a buyer normally expects	What MORT/POS-1 provides	What that means on your file
Seller warranties about condition and fixtures	None. The property is taken as is	An inspection is the only information your buyer will get, and a seller property information statement is not coming
Clear title on closing	The seller leaves its own security and every junior claim on title	The buyer’s lawyer has to deal with what remains. Get counsel involved early
Proof that the seller may sell	A statutory declaration from the seller, and nothing more	The buyer contracts away the right to demand more evidence
Certainty once the deal is firm	The borrower may redeem up to waiver or fulfilment of conditions	The deal can end through no fault of either party at the agreement
Recourse if the deal collapses	Deposit returned, and the seller disclaims liability for costs and losses	Every dollar your buyer spends before closing is at risk
Chattels included as listed	Chattels and fixtures may or may not be there, and need not be removed	Do not write an inclusion list as though it means what it usually means

Redemption is the risk agents underestimate

Everything else in the clause is a known quantity that a lawyer can work with. Redemption is the one that produces an angry client, because it strikes after the buyer has emotionally and financially committed.

Understand the shape of it. A borrower facing enforcement has every incentive to find money, and the pressure of an accepted offer is often exactly what produces it — a family member steps in, a private lender funds, a refinance closes. From the borrower’s side that is a good outcome and the law preserves their ability to reach it. From your buyer’s side it is weeks of work and several thousand dollars, gone.

Which is why you tell them first. Not in a paragraph they skim, but as a spoken sentence: the person who lost this house can get it back by paying the debt, and if that happens you get your deposit and nothing else. Then send it in an email. Whether any particular exercise of the redemption right is timely or effective is a legal question for your client’s lawyer, and it is one of the reasons a power of sale purchase is not a file to run without counsel involved from the start.

SPEND CAUTIOUSLY BEFORE CLOSINGThe clause expressly disclaims the seller’s responsibility for costs, expenses, loss or damages the buyer incurs. Advise your buyer to sequence their spending — appraisal and inspection early because they inform the decision, movers and contractors late. Agents who encourage a client to line up trades the week an offer goes firm are creating an expensive lesson.

Title, encumbrances and the lawyer’s real job

The provision letting the seller leave junior claims on title is the one that most often surprises a buyer’s lawyer late. A property in enforcement frequently carries second and third charges, construction liens, writs, tax arrears and utility claims, and the clause says the seller is not clearing them.

What happens to them is a question of priority and of Ontario’s mortgages legislation, which the clause makes paramount over anything in the agreement that conflicts. It is not a question for you. What is for you is the timetable: the buyer’s lawyer needs a real opportunity to search title and requisition before anything goes firm, and that means the title and requisition arrangements in this agreement need to be read rather than assumed. I have written separately about how title clauses behave in an ordinary agreement; power of sale files are where the difference shows.

The practical tool is a lawyer’s approval condition — LAW-1 in the lawyer’s approval category — drafted with a period long enough to be worth something. Lenders will sometimes resist conditions on a power of sale, and you may lose the property to a cleaner offer. That is a real commercial choice and it should be your buyer’s to make, in full knowledge, rather than yours to make quietly by writing an unconditional offer for them. I have set out the ways that condition gets misused in the post on lawyer’s approval conditions.

As is, and what it does not do

As is disposes of the seller’s warranties. It does not dispose of your obligations. This is the most misunderstood point on the whole file.

Where a seller’s agent knows of a latent defect that renders a property unfit for habitation or dangerous, the duty to disclose that fact to interested buyers, to use best efforts to obtain an acknowledgement from each, and to give each a copy does not evaporate because the seller is a lender selling as is. Those duties come from case law rather than from the TRESA regulations, and an as-is clause in an agreement is a term between the parties, not a release of a registrant’s professional obligations. Patent defects are a different matter and remain governed by caveat emptor, but actively concealing one removes that protection.

Stigma issues run through this category more than most, because enforcement properties disproportionately come with histories — a remediated grow operation, a death in the unit, a notorious former occupant, a neighbourhood reputation. Those are non-physical attributes and reactions to them are entirely subjective. On the buying side, identify your client’s concerns early and be prepared to seek protective clauses. On the listing side, get written instructions from the seller. On a lender-owned property those instructions may take a while to come, which is another reason to start early.

One more practical consequence. There is no point writing a condition for a seller property information statement into a power of sale offer. SPIS-1 exists because a buyer who wants a statement has to contract for it, and a lender-seller has no personal knowledge of the property to state. The information gap is the deal. Fill it with an inspection and with the buyer’s own investigations instead.

The clause is usually not the clause

In my experience you will rarely see MORT/POS-1 used on its own. Lenders’ counsel typically attach their own power of sale schedule, and those schedules go further than this one in places. Read the schedule you are actually given, line by line, and compare it against what you understand MORT/POS-1 to do. Assuming they match is how agents end up briefing a client on terms that are not in their agreement.

Your exposure as the registrant

The complaint on a power of sale file is almost never about price. It is that the client says they were not told — not told the borrower could redeem, not told the appliances might be gone, not told that a second mortgage would still be sitting on title when their lawyer searched it.

So build the file that answers that. Before the offer, send a written summary in plain language of what the buyer is accepting: as is, no warranties, chattels uncertain, encumbrances not discharged, redemption possible, costs at the buyer’s risk. Keep it. It takes ten minutes and it is the difference between a defensible file and an uncomfortable one.

Advertising deserves a word too. Power of sale listings attract a particular kind of marketing, and under the advertising rules a misleading statement is one that causes someone to have a wrong idea or impression — it does not matter that not everyone would be misled. Language suggesting a property is worth more than it is being sold for, or implying a bargain that the buyer’s own numbers do not support, is exactly what gets a registrant into difficulty. Comparative and volume claims need supporting calculation behind them.

And if a buyer approaches you unrepresented on your power of sale listing, the ordinary self-represented party rules apply in full, and they are harder here than usual because a self-represented buyer facing this clause will ask you what it means. You may explain that you act for the seller and not for them, deliver and explain the RECO Information Guide and the self-represented party form, and make reasonable efforts to get written acknowledgement of that form. You may not advise them on price, terms or clauses. Telling an unrepresented buyer whether they should accept an as-is provision is advice on terms.

How to run the file

Get the actual schedule from the listing brokerage before you draft, and read it against your understanding of MORT/POS-1.
Brief the buyer in writing on what they are giving up, and get their reply before the offer goes out.
Involve the buyer’s lawyer at the drafting stage rather than after acceptance, and use a lawyer’s approval condition with a realistic period wherever the seller will accept one.
Inspect. It is the only condition information your buyer is going to get.
Assume nothing about what stays in the house, and tell the buyer to budget for appliances.
Sequence the buyer’s pre-closing spending so the recoverable costs come first and the unrecoverable costs come last.
Diarize the borrower’s redemption risk as a live item until conditions are satisfied, and keep the buyer’s expectations calibrated the whole way.

None of that makes a power of sale a bad purchase. Plenty of them are excellent purchases. It makes it a purchase the buyer entered with their eyes open, which is the only version of this file you want your name on.

Questions agents actually ask

Can the borrower stop a power of sale after my offer is accepted?

Yes. MORT/POS-1 records that the borrower may still pay off the debt and recover the property up to the point the rights of termination are waived or lapse, or the conditions are met, and that the agreement is subject to that. If redemption occurs the agreement is null and void and the deposit is returned in full. The buyer’s other costs are not recoverable under the clause. Tell your buyer this before they sign.

Does the seller have to clear the other mortgages on a power of sale?

Not under this clause. It provides that the seller need not clear its own security, or anything ranking behind it in priority, whether that is a later charge, a lien or another registered claim. What happens to those interests is a question of priority and of Ontario’s mortgages legislation, and it belongs to the buyer’s lawyer. Get counsel involved before the agreement goes firm, not afterwards.

Are the appliances included in a power of sale purchase?

Treat them as uncertain. The clause has the seller make no representation about the inclusion of chattels or fixtures or about who owns the appliances, says chattels and fixtures may or may not be included, and relieves the seller of any obligation to remove what is left. Writing an inclusion list into the offer does not give it the meaning it would have on an ordinary resale. Budget for replacements.

Can my buyer put conditions in a power of sale offer?

You can ask, and lenders sometimes accept. A lawyer’s approval condition with a realistic period and a home inspection condition are the two worth fighting for, because the buyer is getting no seller warranties and no seller property information statement. You may lose the property to an unconditional competitor, and that trade-off is the buyer’s decision to make knowingly rather than yours to make silently.

Does an as-is clause remove my disclosure obligations as the listing agent?

No. An as-is provision is a term between the parties. Where a seller’s agent knows of a latent defect that renders the property unfit for habitation or dangerous, the duty to disclose that to interested buyers, use best efforts to obtain acknowledgements and provide copies is unaffected. Those duties come from case law rather than the TRESA regulations, and no contractual clause between buyer and seller displaces them.

Is MORT/POS-1 the clause I will actually see on a power of sale deal?

Often not. In my experience most lenders’ counsel attach their own power of sale schedule, and those schedules can go further than MORT/POS-1 in places. Read what you are actually given rather than assuming it matches the clause you know. If your brief to your buyer is based on the OREA clause and the agreement says something different, the brief is wrong and the agreement governs.

The clause checklist I make my own agents use

A one-page pre-submission check for conditions and schedules — the dates, the notice route, and the eight things that get missed. Built for Ontario agents. Free, and there is no drip campaign behind it.

Separately — if you have ever wondered what your last twelve months would have paid on a different split, run it through Quantum Leap. Six questions, no signup wall.

Reading a lender’s schedule for the first time?

Power of sale paper is not OREA paper, and the first time an agent meets a lender’s schedule is usually on a live deal with a client waiting. At RE/MAX Quantum those documents come to me before they go to the client. If nobody is reading yours, that is worth talking about.

Book a 15-minute call or call or text 833-330-1925.

If the honest answer is that your current brokerage is fine, I will tell you that.

The Power of Sale Clause in Ontario: What Your Buyer Gives Up