The company initiated foreclosure over a missed single payment of $650
The Ontario Superior Court of Justice ruled that the sale of a home was invalid due to opportunistic and illegal actions by the mortgage company and subsequent buyers.
In Martin v. 2670082 Ontario Corp, 2024 ONSC 3982, the court set aside the sale of a home in Oakville, Ontario, following a foreclosure initiated by a mortgage company against a homeowner who had missed a single mortgage payment of $650. The court ruled that the process was marred by opportunistic and illegal actions by the mortgage company and subsequent buyers.
On November 20, 2019, the mortgage company obtained a default judgment for foreclosure, leading to the homeowner's loss of $350,000 in equity, representing their life savings. Less than two weeks later, the property was sold for $150,000 below market value. The homeowner remained unaware of the foreclosure and sale until an eviction attempt was made. Legal action was then taken to overturn the default judgment and sale.
For over three years, the homeowner refused to leave, while the buyer encumbered the property and defaulted on its mortgage, leading to an eventual eviction in March 2023 by the buyer's creditors. The court noted that the foreclosure judgment and sale were initially set aside in December 2020 due to a failure to notify the homeowner about the mortgage assignment, violating s. 31 of the Mortgages Act.
The Court of Appeal upheld the decision on the improperly obtained foreclosure judgment but remitted the sale for trial. The trial determined that the buyer could not claim protection as a bona fide purchaser under the Land Titles Act due to actual notice of the homeowner’s occupancy and potential claim.
The court found that both the mortgage company’s principal and the buyer’s principal acted in bad faith, with evidence showing knowledge of the occupancy and grounds to challenge the foreclosure. The rapid sale was deemed a deliberate attempt to evade legal scrutiny, preventing the homeowner from taking timely legal action.
Ultimately, the Superior Court ordered the mortgage company to pay $354,197.58 plus interest, representing the sale proceeds less the mortgage amount owed, emphasizing the importance of transparency and adherence to legal notification requirements in foreclosure proceedings.
