Mortgages | By Lawyers
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Mortgages

ON

This publication guides practitioners in Ontario through the preparation of loan agreements, mortgages, and guarantees.

1 Matter Plan

Overview

The commentary covers the drafting and execution of loans, charges, amendments, variations, and assignment deeds, as well as completion, registration, discharge, and default, whether acting for the borrower or the lender. 

The Reference materials folder includes guidance on electronic signing and remote witnessing, and the Getting the matter underway folder contains essential compliance and client engagement documents. The comprehensive Retainer Instructions ensure that all necessary information is gathered from the client at the outset of the matter.

Precedents in this publication include:

  • Library of loan documents, including:
    • Mortgage;
    • Promissory note;
    • Agreement for assignment of rents;
    • General security agreement;
    • Guarantee;
    • Borrowing resolution for a corporation;
  • Assignment of mortgage;
  • Default notice.
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1 Matter Plan Included

  • Item icon ALERTS - Nil
  • Item icon Full Commentary - Mortgages (ON)
  • Folder icon Reference materials
    • Item icon AI Prompts
    • Item icon Electronic Signing and Remote Witnessing
    • Item icon Further information
  • Item icon Overview
    A mortgage is a legal agreement that secures the repayment of a loan. The security for the loan is typically a charge registered against the title to the borrower's real property. This registration provides the lender with legal remedies, including the right to sell the secured property if the ...

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  • Item icon Summary of the process
    The usual steps in acting in a mortgage matter are:

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  • Folder icon A. Getting the matter underway
    • Item icon File cover sheet - Mortgages
    • Item icon To do list - Mortgages
    • Item icon First steps
    • Item icon Client details, verification, and source of funds
    • Item icon Retainer instructions - Mortgages
    • Item icon Conflict of interest check
    • Item icon Initial letter to borrower client with retainer agreement
    • Item icon Initial letter to lender client with retainer agreement and summary of loan terms
    • Item icon Retainer agreement - Ontario
    • Item icon Scope of work - Mortgages - Acting for the lender
    • Item icon Scope of work - Mortgages - Acting for the borrower
    • Item icon Summary of loan terms
    • Folder icon If required - Client consents
      • Item icon Consent to joint retainer
      • Item icon Consent to act with conflict
    • Item icon Time and costs estimates
    • Folder icon If required - Updating costs disclosure and non-engagement
      • Item icon Letter to client updating costs disclosure
      • Item icon Letter to client advising non-engagement
    • Folder icon General deeds, agreements, execution clauses, and statutory declarations
      • Item icon Deeds and Agreements
      • Folder icon Deeds
        • Item icon Confidentiality deed
        • Item icon Deed for general use
        • Item icon Deed of assignment of agreement
        • Item icon Deed of gift
        • Item icon Deed of guarantee
        • Item icon Deed of release
        • Item icon General deed of indemnity
        • Folder icon Library of standard clauses for deeds
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Agreements
        • Item icon Agreement for general use
        • Item icon Heads of agreement
        • Item icon Non-disclosure agreement - Formal
        • Item icon Non-disclosure agreement - Informal
        • Folder icon Library of standard clauses for agreements
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Execution clauses
        • Item icon Execution clauses - Agreements and contracts
        • Item icon Execution clauses - Deeds
      • Folder icon Statutory declaration
        • Item icon Statutory declaration
      • Item icon Standard annexure note for documents
  • Folder icon B. Mortgage considerations
    • Item icon Mortgage terms
      For most individuals, a mortgage represents their largest financial obligation. Mortgage agreements contain numerous specialized terms that define the core aspects of the relationship between the lender and the borrower. It is essential that borrowers and their legal representatives fully ...

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    • Item icon Private mortgages
      A private mortgage is a mortgage transaction in which the lender is not:

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    • Item icon Prescribed forms 9D and 9E
      When a lawyer acts for a lender, they are required to complete Forms 9D and 9E, unless one of the exceptions outlined in s 24(2) of By-Law 9 applies. This means that in most cases when a client is lending money to another individual and the loan is to be secured by a charge on ...

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    • Item icon Investment Authority
    • Item icon Letter to lender enclosing form 9D investment authority for signing
    • Folder icon If required - Representing a lender client after funds are advanced
      • Item icon Representing a lender client after funds are advanced
        In circumstances where a lender client has already advanced funds to a borrower before retaining a lawyer, Form 9D is still mandatory. The form must be completed and signed by the lender, even though funds have been advanced. Additionally, the lender must provide a written acknowledgement ...

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      • Item icon Acknowledgement by lender that funds already advanced
      • Item icon Investment Authority
      • Item icon Report on The Investment
      • Item icon Final report to lender
    • Item icon Acting for the lender and the borrower
      There is a general prohibition against a lawyer acting for both the lender and the borrower in a mortgage transaction. This prohibition extends to 2 or more lawyers who practise in the same firm: r 3.4-12 of the Rules of Professional Conduct. However, there are exceptions to this rule ...

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    • Item icon Consent to joint retainer
    • Item icon Certificate of independent legal advice for borrower in relation to a consent to joint retainer
    • Item icon Certificate of independent legal advice for lender in relation to a consent to joint retainer
    • Item icon Due diligence
      Lender's due diligence To deter fraud, lenders conduct the following due diligence checks:

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    • Item icon Client details, verification, and source of funds
    • Item icon Interest rate considerations
      The payment of interest is not a fundamental requirement of a loan agreement. A loan may be structured to require only the repayment of the principal sum. However, if interest is to be charged, the agreement must stipulate the applicable interest rate based on the value of the principal. ...

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    • Item icon Record keeping when representing the lender
      When acting for a lender in a mortgage transaction, the record keeping requirements are set out in Rule 9 of the Rules of Professional Conduct. Subject to limited exceptions, s 24 of Rule 9 requires every lawyer who acts for a lender to maintain a file for each charge, which must ...

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    • Item icon Implied covenants
      Section 7(1) of the Land Registration Reform Act 1990 provides that every registered charge is deemed to include the implied covenants listed in that section. To avoid the automatic application of these implied covenants, the charge instrument may instead refer to a registered set of standard ...

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    • Item icon Title searching
      Title searching is the process of investigating the legal title of a parcel of land to confirm ownership and identify any outstanding issues that may affect title, including work orders, deficiency notices, charges, claims, or other encumbrances. This investigation ensures that the lender, or other ...

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    • Item icon Title search worksheet - Mortgage transactions
    • Item icon Loan agreements and registered charge
      A loan agreement sets out the terms of a mortgage secured by a charge registered on the title to the borrower's property. Two common forms of loan agreements are the Mortgage Commitment and the Promissory Notice, both of which can be found on the matter plan. Under the Land Registration Reform Act, ...

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    • Item icon Mortgage commitment
    • Item icon Charge or Mortgage of Land
    • Item icon Mortgage Schedules - Teraview
    • Item icon Cautions
      The land title system operates on the principle that title to land is determined by registration. Registration confers conclusive proof of ownership, subject only to interests or notices appearing on title. However, certain interests in land cannot be registered directly. To protect such interests, ...

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    • Item icon Collateral mortgages
      Collateral mortgages are typically registered for an amount equal to 100% to 125% of the property's value, rather than the principal loan amount. This structure allows the lender to advance additional funds under the existing charge, up to the registered amount, without requiring the borrower to ...

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    • Item icon Collateral security
      In addition to the charge registered on title to real property, a borrower may pledge other forms of collateral as security for the mortgage. This additional security can include assets such as accounts receivable, a general assignment of rents, personal guarantees, or the borrower's personal ...

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    • Item icon Vendor take-back mortgages
      A Vendor Take-Back (VTB) mortgage is a form of financing provided by the vendor of a property to the purchaser for a portion of the purchase price. The terms of the VTB mortgage may be incorporated into the agreement of purchase and sale, or may be negotiated separately if the purchaser is unable ...

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    • Item icon Subsequent mortgages
      When a charge is already registered on title, any subsequent charge is typically referred to as a second mortgage. To register a second mortgage, the lender may require the consent of the first mortgagee, particularly if the initial loan agreement prohibits the borrower from securing additional ...

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    • Item icon Reverse mortgages
      A reverse mortgage allows a borrower to access the equity in their property without having to sell it. This type of loan typically permits the borrower to borrow up to 55% of the property's appraised value. Repayment of the mortgage is deferred until the borrower sells the property, moves out, or ...

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    • Item icon Equitable mortgages
      Under the land titles system, there can be no legal mortgage without registration. However, upon execution, an equitable mortgage arises pending registration. There are 2 primary forms of an equitable mortgage. That of:

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    • Item icon Repayment
      A loan agreement is a legally binding contract. If the agreement specifies a fixed repayment date, that date governs the borrower's repayment obligation for the purposes of any contract dispute. Repayment made either before or after the specified repayment date may constitute a breach of contract. ...

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  • Folder icon C. Standard mortgage documents
    • Item icon Standard mortgage documents
      The standard mortgage documents typically included in a private mortgage transaction are as follows:

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    • Item icon Checklist for mortgage documents to send, request and receive - Acting for the lender
    • Item icon Investment Authority
    • Item icon Summary of loan terms
    • Item icon Initial letter to borrower's lawyer following title search with documents attached for signature by the borrower
    • Item icon Initial letter to borrower's lawyer requesting title search material to prepare documents for the borrower
    • Item icon Letter to borrower's lawyer requesting details to prepare loan documents
    • Item icon Letter to borrower's lawyer with documents attached for signature
    • Item icon Letter to borrower’s lawyer with documents attached for signature by borrower and consenting spouse
    • Item icon Borrower identification verification form
    • Item icon LSO Client Identification Form (Individual)
    • Item icon LSO Client Identification Form (Individual or Organization)
    • Item icon LSO Client Identification Form (Organization)
    • Item icon Mortgage commitment
    • Item icon Letter of commitment
    • Item icon Prompt comparing instructions with draft loan agreement
    • Item icon Acknowledgement of standard charge terms
    • Item icon Funds Summary
    • Item icon Direction re funds - Net mortgage advance
    • Item icon Direction re funds
    • Item icon Indemnity, authorization, and direction
    • Item icon Assignment of insurance
      The Assignment of Insurance is a document in which the borrower assigns to the lender, as additional security for the amounts owing under the loan, all insurance policies covering the property secured by the mortgage. This assignment authorizes and directs the insurer to pay the lender any ...

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    • Item icon Assignment of insurance
    • Item icon Certificate of independent legal representation - One borrower
    • Item icon Certificate of independent legal representation - Multiple borrowers
    • Item icon Certificate of independent legal representation and identification
    • Item icon Acknowledgement of independent legal representation
    • Item icon Acknowledgement and direction regarding charge
    • Item icon Acknowledgement and direction regarding electronic documents
    • Item icon Acknowledgement of electronic documents
    • Item icon Solicitor's certificate re signing
    • Item icon Undertaking re advance
    • Item icon Lawyer's undertaking - Refinance
    • Item icon Undertaking to discharge
    • Item icon Undertaking to discharge and register discharge of mortgage
    • Item icon Undertaking to pay debts
    • Item icon Acknowledgement and direction to register documents
    • Item icon Authorization to complete
    • Item icon Schedule of additional provisions
    • Folder icon Library of statutory declarations
      • Item icon Statutory declaration by borrower - Extensive
    • Folder icon If required - Additional loan documents
      • Item icon Acknowledgement of receipt of financing statement
      • Item icon Agreement for assignment of rents - Concise
      • Item icon Agreement for assignment of rents - Extensive
      • Item icon Borrowing resolution of corporation
      • Item icon Certificate of incumbency
      • Item icon Certificate of independent legal advice
      • Item icon Certificate of officer
      • Item icon Environmental representations, warranties, and indemnities
      • Item icon General security agreement
      • Item icon Guarantee
      • Item icon Lawyer's undertaking - Purchase
      • Item icon Letter to lender's lawyer with corporate opinion
      • Item icon Non-merger covenant
      • Item icon Notice and direction to tenants
      • Item icon Promissory note
      • Item icon Promissory note - No interest
      • Item icon Waiver of independent legal advice - Guarantor
    • Folder icon If required - Spousal consent documents
      • Item icon Spousal consent documents
        The spousal consent documents must be signed by the consenting spouse with their own solicitor, separate from the solicitor acting for the spouse registered on title to the property securing the mortgage. This precaution helps to prevent the mortgage loan from being invalidated by any duress claims ...

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      • Item icon Certificate of independent legal advice - Consenting spouse
      • Item icon Acknowledgement and direction regarding charge
      • Item icon Acknowledgement and direction regarding electronic documents
      • Item icon Acknowledgement of standard charge terms - Spousal consent
      • Item icon Identification verification form - Consenting spouse
      • Item icon Direction of funds - Consenting spouse
    • Folder icon If required - Corporate lender
      • Item icon Borrowing resolution of corporation
    • Item icon Request for funds
    • Item icon Letter to borrower's lawyer requesting documents for closing
    • Item icon Letter to lender's lawyer with closing documents - Extensive
    • Item icon Letter to lender's lawyer with closing documents
  • Folder icon D. Electronic registration
    • Item icon Electronic registration
      Charges, discharges, and mortgage amending agreements may be registered electronically through Teraview. Each instrument has specific registration requirements that must be met before it can be registered and certified on title. These requirements are detailed in the Electronic Registration ...

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    • Item icon Information required to prepare the charge instrument
      To prepare an electronic charge instrument for registration on title through the Teraview system, the following information is typically required:

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    • Item icon Preparing the electronic charge instrument
      The steps for preparing and registering an electronic charge instrument are set out in the Electronic Registration Procedures Guide. A summary of that process is as follows:

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    • Item icon Registration
      Registration of the charge on title is typically completed by the lender's lawyer before mortgage funds are advanced to the borrower's lawyer's trust account. As part of the borrower's signing package, the borrower returns a signed Acknowledgement and Direction re Charge, authorizing the ...

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    • Item icon Mortgage closing instructions
    • Item icon Letter to borrower's lawyer enclosing registered charge and deposit receipt
    • Folder icon Final report to the lender
      • Item icon Final report to the lender
        The final report to the lender is prepared after the charge has been registered on title to the borrower's real property. This report confirms that the lender's instructions have been fully carried out and that the mortgage funds have been advanced, secured by the registered charge. The report also ...

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      • Item icon Report on The Investment
      • Item icon Final report to lender
      • Item icon Letter to lender with report on investment or final report
    • Item icon Request for funds
  • Folder icon E. Discharge, transfer, assignment, variation and postponement
    • Item icon Discharge of mortgage
      Once the borrower has repaid the mortgage in full, including all interest, costs, and fees, the charge securing the mortgage is discharged from title to the borrower's property. The discharge may be registered by either the lender or the borrower's lawyer, who is also responsible for covering the ...

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    • Item icon Discharge statement
    • Item icon Discharge of Charge or Mortgage
    • Item icon Acknowledgement and direction to register documents
    • Item icon Registration of the discharge
      The process to register a discharge in Teraview is as follows:

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    • Item icon Letter to current lender requesting mortgage statement for discharge
    • Item icon Document registration agreement (two-party) - Law Society
    • Item icon Multi-Party Document Registration Agreement (MDRA) – Law Society Ontario
    • Item icon Letter to current lender's lawyer requesting discharge particulars after mortgage paid off
    • Item icon Letter to current lender requesting discharge particulars after mortgage paid off
    • Item icon Transfer or assignment of mortgage or charge
    • Item icon Transfer of charge – Teraview
    • Item icon Assignment of mortgage
    • Item icon Variation of mortgage or charge
    • Item icon Agreement to amend mortgage
    • Item icon Postponements
      The Teraview system allows for an instrument to be postponed so that it appears after another registration in the sequence of encumbrances registered on title. This postponement allows a charge or other encumbrance to be moved to a later priority position. Postponement is often a requirement of ...

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    • Item icon Letter to creditor's lawyer requesting postponement
  • Folder icon F. Default
    • Item icon Default
      A default typically arises when a borrower fails to make payments to the lender in accordance with the terms of the loan agreement. However, a default can also occur if the borrower breaches mortgage covenants. Examples include when the borrower fails to maintain home insurance on the secured ...

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    • Item icon Lender's default remedies
      The mortgage agreement outlines the remedies available to the lender in the event the borrower defaults on their mortgage obligations. A Default typically arises when the borrower fails to make the required payments under the loan agreement. Two common remedies include:

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    • Item icon Letter to borrower other side providing notice of default
    • Item icon Power of sale
      During a mortgage default, a lender has a statutory right to commence a power of sale proceeding under s 24 of the Mortgages Act 1990. If the loan agreement does not contain a power of sale provision, the lender may still rely on the statutory power of sale under Part II of the Act, ...

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    • Item icon Letter to borrower other side enclosing notice of sale under mortgage
    • Item icon Notice of Sale under Mortgage
    • Item icon Obtaining possession
      Section 7(a)(iv) of the Mortgages Act 1990 grants the lender the power to take quiet possession of the secured property on the borrower's default. The borrower may voluntarily vacate the property. If they do not, the lender must commence proceedings for possession of land. On obtaining a court ...

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    • Item icon Power of foreclosure
      Foreclosure is a legal process by which a lender obtains a court order transferring title to the secured property from the borrower to the lender. Once the order is granted, the borrower's right of redemption is extinguished, and the transfer of title constitutes full satisfaction of the debt owed ...

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  • Folder icon G. Finalizing the matter
    • Item icon Final report to the lender
      The final report to the lender is prepared after the charge has been registered on title to the borrower's real property. This report confirms that the lender's instructions have been fully carried out and that the mortgage funds have been advanced, secured by the registered charge. The report also ...

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    • Item icon Letter to lender client with report enclosing documents
    • Item icon Final report to lender
    • Item icon Letter to borrower client after closing finalizing the matter
    • Item icon Invoice recital - Mortgages - Acting for the borrower
    • Item icon Invoice recital - Mortgages - Acting for the lender
    • Item icon Trust Ledger Statement
    • Item icon Closing the file
    • Item icon File closing checklist
  • Item icon Comments and suggestions for By Lawyers

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