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
      An AI prompt defines a specific task for AI to perform, like drafting a particular document, and provides clear instructions on how to execute that task. The goal is for the AI to quickly create a useful first draft of a document, which the user verifies and refines into a final version, ultimately ...

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    • Item icon Electronic Signing and Remote Witnessing
    • Item icon Further information
  • Item icon Overview
    A mortgage is a legal agreement that secures repayment of a loan. The security is usually a charge registered against title to the borrower's real property. Registration gives the lender legal remedies, including the right to sell the property if the borrower defaults. The mortgage agreement sets ...

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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
    • Item icon Due diligence
      Lender's due diligence To deter fraud, lenders conduct the following due diligence checks:

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    • Item icon Record keeping when representing the lender
      When acting for a lender, 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 acting for a lender to keep a file for each charge containing:

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    • Folder icon If required - Acting for the lender and the borrower
      • Item icon Acting for the lender and the borrower
        A lawyer generally cannot act for both the lender and the borrower in a mortgage transaction. The prohibition extends to 2 or more lawyers in the same firm: r 3.4-12 of the Rules of Professional Conduct. However, there are exceptions to this rule outlined in r 3.4-14.

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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 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 types
      A mortgage transaction may be based on any of several mortgage types, each with its own structure and considerations.

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    • Item icon Mortgage terms
      For most people, a mortgage is their largest financial obligation. Mortgage agreements use many specialized terms that define the core of the lender-borrower relationship. Borrowers and their lawyers must understand these terms so the mortgage is carefully reviewed and the borrower knows their ...

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    • Item icon Summary of loan terms
    • Item icon Implied covenants
      Section 7(1) of the Land Registration Reform Act 1990 deems every registered charge to include the implied covenants listed in that section. To avoid these implied covenants, the charge instrument may instead refer to a registered set of standard charge terms by filing number. Under ...

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    • Item icon Interest rate considerations
      Interest is not an essential requirement of a loan agreement, a loan may require repayment of the principal only. If interest is charged, the agreement must state the rate applied to the principal. Section 6 of the Interest Act, R.S.C., 1985, c. I-15 requires any mortgage or interest-bearing ...

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    • Item icon Insurance considerations
      The central insurance considerations are mortgage loan insurance and proof of insurance for the property securing the loan.

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    • Item icon Repayment
      A loan agreement is a legally binding contract. If it specifies a fixed repayment date, that date governs the borrower's repayment obligation in any contract dispute. Repaying before or after that date may breach the contract. The borrower may then face prepayment charges, late fees, or other ...

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    • Item icon Security for the loan
      Collateral security Besides the charge registered on title, a borrower may pledge other collateral as security for the mortgage, such as accounts receivable, a general assignment of rents, personal guarantees, or the borrower's personal property. This collateral secures the same debt as the ...

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    • 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 are the Mortgage Commitment and the Promissory Note, both on the matter plan. Under the Land Registration Reform Act, R.S.O. 1990, c. L.4, s 8 allows a set ...

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    • Item icon Mortgage commitment
    • Item icon Charge or Mortgage of Land
    • Item icon Mortgage Schedules - Teraview
    • Folder icon Private mortgages
      • 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
        A lawyer acting for a lender must complete Forms 9D and 9E unless an exception in s 24(2) of By-Law 9 applies. So in most cases where a client lends money secured by a charge on real property, the forms are mandatory.

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      • Item icon Investment Authority
      • Item icon Letter to lender enclosing form 9D investment authority for signing
    • Folder icon Title searching
      • Item icon Title searching
        Title searching means investigating the legal title to a parcel of land to confirm ownership and identify outstanding issues affecting title, such as work orders, deficiency notices, charges, claims, or other encumbrances. It confirms that the lender or other interested party can register a viable ...

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      • Item icon Title search worksheet - Mortgage transactions
      • Item icon Initial letter to borrower's lawyer following title search with documents attached for signature by the borrower
      • Item icon Cautions
        The land title system operates on the principle that title to land is determined by registration. Registration is conclusive proof of ownership, subject only to interests or notices appearing on title. However, some interests in land cannot be registered directly. The caution system allows them to ...

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    • Folder icon If required - Representing a lender client after funds are advanced
      • Item icon Representing a lender client after funds are advanced
      • 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
  • Folder icon C. Standard mortgage documents
    • Item icon Standard mortgage documents
      The standard documents in a private mortgage transaction are:

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    • Item icon Checklist for mortgage documents to send, request and receive - Acting for the lender
    • Folder icon Initial letters to borrower and lawyer
      • 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 Investment Authority
    • Folder icon Loan agreement documents
      • Item icon Summary of loan terms
      • Item icon Mortgage commitment
      • Item icon Letter of commitment
      • Item icon Prompt comparing instructions with draft loan agreement
    • Folder icon Identification verification forms
      • 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)
    • Folder icon Borrower mortgage documents
      • 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
        In the Assignment of Insurance, the borrower assigns the lender all insurance policies covering the mortgaged property as additional security for the amounts owing. It authorizes and directs the insurer to pay any proceeds under those policies to the lender. So if the mortgaged property is damaged ...

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      • Item icon Assignment of insurance
      • 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 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 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 Statutory declaration - One and the same declaration
      • Item icon Acknowledgement and direction to register documents
      • Item icon Authorization to complete
      • Item icon Schedule of additional provisions
      • Item icon Request for funds
    • Folder icon Library of statutory declarations by borrower
      • Item icon Statutory declaration - One borrower - Blank
      • Item icon Statutory declaration - One borrower not married - Concise
      • Item icon Statutory declaration - One borrower not married - Extensive
      • Item icon Statutory declaration - One borrower and spousal consent required - Blank
      • Item icon Statutory declaration - One borrower and spousal consent required - Concise
      • Item icon Statutory declaration - One borrower and spousal consent required - Extensive
      • Item icon Statutory declaration - Married borrowers - Blank
      • Item icon Statutory declaration - Married borrowers - Concise
      • Item icon Statutory declaration - Married borrowers - Extensive
      • Item icon Statutory declaration - Multiple borrowers - Blank
      • Item icon Statutory declaration - Multiple borrowers - Not matrimonial home or owner occupied - Concise
      • Item icon Statutory declaration - Multiple borrowers - Not matrimonial home or owner occupied - Extensive
    • Folder icon Letters exchanging closing documents
      • 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 If required - Spousal consent documents
      • Item icon Spousal consent documents
        The consenting spouse must sign the spousal consent documents with their own lawyer, separate from the lawyer acting for the spouse registered on title. This helps prevent the loan being invalidated by a duress claim from the consenting spouse. The package includes a Certificate of Independent ...

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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 Statutory declaration - One and the same declaration - Consenting spouse
      • Item icon Direction of funds - Consenting spouse
    • 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 - Corporate lender
      • Item icon Borrowing resolution of corporation
  • Folder icon D. Electronic registration
    • Item icon Electronic registration
      Charges, discharges, and mortgage amending agreements may be registered electronically through Teraview. Each instrument has registration requirements that must be met before it can be registered and certified on title. These requirements are detailed in the Electronic Registration Procedures ...

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    • Item icon Information required to prepare the charge instrument
      Preparing an electronic charge instrument in Teraview typically requires:

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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. In summary:

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    • Item icon Registration
      The lender's lawyer typically registers the charge on title before advancing the mortgage funds to the borrower's lawyer's trust account. In the signing package, the borrower returns a signed Acknowledgement and Direction re Charge authorizing registration of the charge.

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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 is registered on title. It confirms that the lender's instructions were carried out and that the mortgage funds were advanced, secured by the registered charge. It also summarizes the lender's secured position, confirming the charge's ...

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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
  • 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 is discharged from title. Either the lender's or the borrower's lawyer may register the discharge and pay the registration fees. Once registered in Teraview, the discharge removes the lender's ...

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    • Item icon Discharge statement
    • 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
      Teraview allows an instrument to be postponed so it ranks after another registration in the sequence of encumbrances on title. That moves the charge or encumbrance to a later priority position. Mortgage financing often requires postponement, so that existing encumbrances, such as notices 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 as the loan agreement requires. A default can also arise from breach of the mortgage covenants such as failing to:

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    • Item icon Lender's default remedies
      The mortgage agreement sets out the lender's remedies if the borrower defaults. Two common remedies include:

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    • Item icon Letter to borrower other side providing notice of default
    • Item icon Power of sale
      On default, a lender has a statutory right to begin a power of sale proceeding under s 24 of the Mortgages Act 1990. If the loan agreement has no power of sale provision, the lender may still rely on the statutory power of sale under Part II of the Act, provided 3 months have passed ...

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    • Item icon Letter to borrower other side enclosing 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 vacate voluntarily. If not, the lender must begin proceedings for possession of land. On obtaining a court order, the lender is ...

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    • Item icon Power of foreclosure
      In foreclosure, a lender obtains a court order transferring title to the secured property from the borrower to itself. The order extinguishes the borrower's right of redemption, and the transfer of title fully satisfies the mortgage debt. Following foreclosure, the lender may retain, lease, ...

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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 is registered on title. It confirms that the lender's instructions were carried out and that the mortgage funds were advanced, secured by the registered charge. It also summarizes the lender's secured position, confirming the charge's ...

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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 Closing the file
    • Item icon File closing checklist

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