Your Mortgage Lender Served a Statement of Claim in Ontario: What It Asks For and What Is Still Open to You

What a Mortgage Lender's Statement of Claim Usually Asks For

A Statement of Claim is the court document that starts the lender's case against the homeowner.

In Stonefield Capital's experience, the Statement of Claim a lender serves alongside a power of sale in Ontario asks the court for possession of the property and for judgment for the mortgage debt against everyone personally liable for it: the borrowers and any guarantors.

A court order to pay money can be enforced against the person who owes it by seizing and selling their property or by garnishing money owed to them (Rules of Civil Procedure, rules 60.02 and 60.08), so a judgment for the mortgage debt can reach more than the mortgaged property.

In Stonefield Capital's experience, if the money from the sale does not pay everything owed, the lender can pursue the shortfall against everyone personally liable for the mortgage debt.

The claim itself says exactly what the lender is asking for. Reading it with a lawyer the day it arrives is the safest first step.

The Deadline to Respond and Why Missing It Matters

A defendant served in Ontario with a statement of claim has twenty days after service to deliver a statement of defence (Rules of Civil Procedure, rule 18.01).

If no statement of defence is delivered in time, the lender can have the defendant noted in default. A defendant noted in default is deemed to admit the facts the claim alleges, and the lender can then have the court registrar sign judgment for the debt and for possession of the property (Rules of Civil Procedure, rules 19.01, 19.02 and 19.04).

This is the moment to speak to a lawyer. Whether and how to respond to the claim is for the homeowner's lawyer to advise on; Stonefield Capital does not give legal advice.

What Is Still Open to the Homeowner

Alongside the court case, the homeowner can look at the practical options below with their lawyer. The earlier the homeowner chooses, the more of them are still open.

In Stonefield Capital's experience, the earlier in mortgage enforcement a homeowner starts negotiating, the more money is left, because interest, legal fees and the other costs have had less time to build. With a court case under way, the lender's legal costs are already building.

1. 1

   Refinance where there is equity

   Where there is equity left after the arrears and the lender's costs, a new private mortgage can pay out the lender. The guide to stopping a power of sale with a private refinance explains how that works.

2. 2

   Sell the home on the open market

   The homeowner can list the home with a realtor and sell it, paying the lender out of the sale. With a court case under way, the homeowner's lawyer can say what the sale needs in order to close.

3. 3

   Agree an early sale with the lender

   Where the mortgages, arrears and costs add up to about what the home is worth, an early agreed sale can end the process before the lender sells the home itself. Stonefield Capital can introduce a buyer and put that buyer's proposal to the lender with the homeowner's written permission. The agreement can include a payment for moving costs or the first months' rent at a new home. No payment is promised, and the lender may say no.

What Stonefield Capital Does Not Do in a Court Case

Stonefield Capital does not give legal advice and does not act in the court case. A lawyer handles the court side: the claim, any response to it and any appearance in court. Stonefield Capital looks only at the practical side: the figures, and whether an early agreed sale or a refinance fits.

What Stonefield Capital Can Do, Step by Step

1. 1

   A first look at the figures

   Stonefield Capital reads what the homeowner sends through the form below: the balances, the estimate of value and any lender documents, and compares what is owed with what the home would sell for.

2. 2

   A plain answer on which option fits

   Stonefield Capital tells the homeowner which option fits the situation, including when a refinance or an open-market sale fits better than an early agreed sale.

3. 3

   A buyer and a proposal to the lender, only with written permission

   Where an early agreed sale fits, Stonefield Capital can introduce a buyer for the home and put that buyer's proposal to the lender, only after the homeowner gives written permission. The agreement can include a payment to the homeowner for moving costs or the first months' rent at a new home. Stonefield Capital is paid by the buyer, not by the homeowner.

4. 4

   The homeowner decides

   Nothing is agreed until the homeowner signs, and the homeowner should get independent legal advice before agreeing to anything. Stonefield Capital does not give legal advice, and Stonefield Capital cannot make a lender agree: the lender may say no.