This page gives legal information about residential mortgages. It does not give legal advice, and does not replace advice from other professionals, such as a credit counsellor, licensed insolvency trustee in bankruptcy, or mortgage advisor.  Look at the resources at the end of this section for help if you are having money problems. 

Talk with your lender right away if you are having trouble making your mortgage payments.

The process set out below is known as the “simplified procedure”. It applies to most foreclosures. However, the process may be different in your situation. Please also see: pdf Supreme Court of Nova Scotia Foreclosure Committee - COVID-19 Recommendations, July 22, 2020. (114 KB)

Foreclosure: A legal process which allows the lender to get a court order that directs the sale of the mortgaged property at a public auction.   Money from the sale of the property goes towards paying property taxes, auction costs,  mortgage debt, legal and other costs.  

Foreclosure Order:    A court order that directs the sale of the mortgaged property at a public auction.  The lender must apply to court to get it.  Also called an 'Order for Foreclosure, Possession and Sale'.

Lender: A lender can be a bank, credit union, insurance company, private individual, or loan company.

Mortgagor: The person or people who sign the mortgage and borrow money from the lender.

Mortgagee: The lender, or the financial institution lending the borrowed money.  

Mortgage: An agreement or contract between a borrower (mortgagor) and lender (mortgagee), where the borrower agrees that their property shall be security for a loan. Mortgages can take many forms.  A mortgage can be taken by a lender to secure the borrower's obligations whether or not the borrowed money is used to purchase the mortgaged property.  

Usual steps in a foreclosure
1. Default Borrower defaults on mortgage
2. Demand Letter Lender sends Demand Letter to the borrower(s) advising of the default and giving a deadline to fix the default
3. Notice of Action and Statement of Claim If the borrower does not fix the default by the deadline in the demand letter, the lender starts a legal process in the Supreme Court of Nova Scotia.  The lender serves the borrower(s) with the court documents that start the foreclosure process and name the borrowers as defendants - the Notice of Action and Statement of Claim. These documents must be personally served on the borrower(s).
4. Defence

After being served with the Notice of Action and Statement of Claim, the borrower has a chance to file a Defence or apply to court for other relief. 

Borrower would need to act within the required time:

  • 15 business days, if service happened in Nova Scotia;
  • 30 business days, if service happened somewhere else in Canada;
  • 45 business days, if service happened outside Canada.
5. Motion to Court for Foreclosure Order

If no Defence is filed within the required time, the lender can apply to the Court for a Foreclosure Order.

If a Defence is filed, there will be a court hearing to decide if the Defence is valid.  If Defence is unsuccessful, the lender can apply to the Court for a Foreclosure Order.  

6. Foreclosure Order issued by court

Where the lender applies to the Court for a Foreclosure Order, the Court reviews the documents filed to confirm:

  • that the mortgage is valid; and
  • the amount of debt owed.

If the judge is satisfied, the judge makes the Foreclosure Order.

7. Notice of sale of the property at Public Auction

Once the Court issues a Foreclosure Order the lender may schedule the sale of the property at a public auction.

Notice of the public auction is:

  • published twice in a newspaper before the auction, and
  • sent to the borrower(s) by regular mail at the mortgaged property (or last known address if different from mortgaged property) at least 15 business days before the the public auction sale.
8. Sale of the property at Public Auction

The public auction happens in the judicial district where the property is located. The property is sold to the highest bidder, and the Auctioneer or Sheriff will execute a Deed transferring ownership of the property.

Generally, the homeowner (borrower/mortgagor) should be ready to move out on the date of the public auction.

9. Claim for Deficiency or Surplus after the sale

If the property is sold for less than what is owed to the mortgage lender (the sale does not cover the mortgage debt plus costs) the lender can apply to court to get a Judgment against the borrower(s) for the shortfall amount ('deficiency').  The borrowers get notice of the court hearing date for any deficiency claim, so the borrowers can take part in the hearing if they want to.

If there is money left over from the sale ('surplus') after payment of Auction fees and the mortgage debt, the Auctioneer pays the surplus into Court.  The Court holds the surplus funds pending an application by a person claiming entitlement to the funds – this could be the borrower(s) or another lender.

10. Confirmatory Order

The lender applies to court for an Order confirming that the foreclosure procedure happened following the requirements in the Foreclosure Order

 

Last Reviewed: July 2020

Acknowledgments: Thank you to Stephen Kingston at McInnes Cooper for reviewing this content.