The lender has issued a demand on your commercial mortgage
A demand letter feels final. In British Columbia it is the start of a court process, and there is usually still room to refinance, sell or negotiate if the plan starts early in that process. This page is general information, not legal advice, and the first call should be to your lawyer.
The short answer
A demand letter is the lender calling the whole loan and, on most commercial files, the formal start of enforcement. In British Columbia a lender cannot simply sell the property: foreclosure runs through the Supreme Court, the court sets a redemption period during which you can still pay out, refinance or sell, and the court usually prefers a supervised sale to handing the lender the title.
| Stage | What it means | What you can still do |
|---|---|---|
| Demand letter and notices | The lender calls the loan. Where it intends to enforce on all or substantially all of the inventory, receivables or other business property of an insolvent borrower, it must also send a notice under section 244 of the Bankruptcy and Insolvency Act and wait ten days unless you consent to earlier enforcement | Call your lawyer, get a payout statement, start the refinance or sale plan |
| Petition | The lender files for foreclosure in the Supreme Court of British Columbia | Respond through your lawyer by the deadline on the petition, and open a conversation about forbearance |
| Order nisi | The court confirms the debt and sets a redemption period | Pay out, refinance or sell before it ends. Six months is common on a home; the lender can ask for less where its security is at risk |
| Order for conduct of sale | The court lets a party list and sell the property under its supervision | Any party of record can apply for conduct, and the court must approve the sale |
| Order absolute | Title passes to the lender. Uncommon, usually where a sale would not produce meaningful proceeds | The right to redeem ends, and under section 32 of the Property Law Act the lender can then no longer pursue you on the covenant |
What the demand actually means
The lender has accelerated the loan. It wants all of it, not just the arrears, and the figure in the letter is the whole balance rather than the payments you have missed.
Most commercial mortgages let the lender add its enforcement and legal costs to the debt, so the balance grows while the file sits. Read the letter for three things: the amount claimed, the deadline, and whether a section 244 notice came with it.
Guarantors usually receive their own demand, because the lender can look to them as well as to the property.
Why British Columbia works differently
British Columbia uses court supervised foreclosure rather than the power of sale model used in several other provinces, so every major step needs a court order.
The court usually prefers an order for conduct of sale, which puts the property on the market under court supervision, over an order absolute that simply transfers title to the lender. If the sale falls short of the debt, the lender can seek a personal judgment against the borrower and any covenantor or guarantor for the shortfall.
Sources: Law Society of British Columbia, foreclosure procedure checklist and Bankruptcy and Insolvency Act, section 244. Checked September 22, 2026.
Receivership on an income property
On a tenanted building the lender may not wait for a sale. Depending on the security it holds, it can ask the court to appoint a receiver to collect rents, manage the property and in time sell it.
An assignment of rents can also let the lender direct tenants to pay it directly. That changes who controls the building and who the tenants deal with, which is a practical reason to get ahead of the file rather than behind it.
The realistic ways out
Reinstate. Pay the arrears and the lender's costs if the lender will accept reinstatement. The simplest outcome where the shortfall was a timing event.
Forbearance. An agreement where the lender holds off in exchange for fees, tighter terms, a firm deadline and usually waivers. It buys time, and it is not free.
Refinance. A new lender pays out the old one, usually a private or alternative lender priced for the situation. It only works where there is equity and a believable reason the default will not repeat. Our page on financing that closes quickly covers what that speed costs.
Sell. An orderly sale you control, before conduct of sale is ordered, usually recovers more than a sale run under the court.
Where the problem is wider than one mortgage, a licensed insolvency trustee can explain a proposal under the Bankruptcy and Insolvency Act.
What a refinancing lender will want to see
The payout statement including costs, the court file and its dates, a current appraisal, the rent roll and operating statements, what caused the default and what has changed, and the exit from the new loan. Our deal submission checklist sets out the same list in the order a lender reads it.
Lenders in this space price for risk and for time. Equity is what makes the file possible at all.
When refinancing is the wrong answer
If the property does not have the equity or the income to carry new debt, a higher rate loan only adds cost and delays the same outcome.
In that case an orderly sale, a negotiated workout with the existing lender, or advice from a licensed insolvency trustee usually protects more of what you have. We would rather tell you that than place a loan that makes the position worse.
Demand and foreclosure questions we hear most.
Related situations
Want a straight read on your options?
Send the demand, the payout statement and the property details. We will tell you honestly whether a refinance is realistic, and if it is not, we will say so.