What happens if I miss a mortgage payment during the sale?
Missed a mortgage payment while your house is under contract? This can derail closing — act fast.
What really happens when you miss a mortgage payment during a sale
Missing one mortgage payment while selling triggers three immediate risks: the lender flags a default, the title report can show a missed payment or lien, and the buyer’s lender or title insurer may push for clear payoff proof. In short: closing can delay, net proceeds can shrink, and the sale can even collapse if you don’t handle it fast.
Clear steps to stop a missed payment from blowing up the sale
- Contact your lender immediately. Ask for a payoff statement and explain the pending sale. Many lenders will accept a one-time cure or offer a short forbearance when a sale will pay off the mortgage.
- Talk with your realtor and closing lawyer. They can add protections in escrow and negotiate holdbacks or extended closing dates.
- Provide funds at closing. If you can, bring cash or a certified cheque to cure the missed payment and any late fees at the closing table.
- Consider a bridge loan or payoff loan. If timing is the issue, a short-term loan can clear the mortgage so title clears and closing proceeds flow.
- Ask for written confirmations. Get lender confirmation that the account will be marked paid-in-full at closing to satisfy buyer’s title insurer.
Mortgages & Liens: how a missed payment affects title and liens
Unpaid mortgage amounts can appear on the title search as a potential lien or a notice of default. Title companies demand a clear chain of title to issue standard title insurance. Any outstanding mortgage balance or lien must be satisfied or otherwise resolved before title transfers. If your lender files a notice of default, the buyer’s lender may refuse to fund until it’s resolved.
Timeline and worst-case scenarios
- One missed payment: usually fixable with quick action. Lender often allows cure before sale.
- 30–60 days missed: lender may report to credit bureaus and escalate collection activity. Buyer could walk.
- 90+ days missed: risk of foreclosure initiation in some provinces/states. That can stop a sale and lead to legal actions.
Practical examples that work
- Negotiate a short closing extension while showing the lender’s payoff letter.
- Use escrow holdback: seller authorizes the title company to hold part of proceeds until payoff is proven.
- Convert the sale into a short sale only with lender’s written approval if payoff is less than mortgage balance.
Final advice and call to action
Don’t guess. A single missed mortgage payment during a sale is a problem you can solve with urgency and the right team. Mortgages & Liens matter at closing. You need a local expert who knows how lenders, title companies, and escrow work to protect your sale and your funds.
If you’re selling now and facing a missed payment or lien issue, call or email me. I’ll evaluate your payoff options, coordinate with the lender and title company, and keep the sale on track.
Tony Sousa — Local Realtor, Mortgages & Liens specialist
Email: tony@sousasells.ca | Phone: 416-477-2620 | https://www.sousasells.ca
Ready to close on time and get your full proceeds? Reach out now.
