Mortgages

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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A private mortgage is a mortgage transaction in which the lender is not:

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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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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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Lender's due diligence To deter fraud, lenders perform the following due diligence checks:

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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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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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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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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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A loan agreement sets out the terms of the mortgage secured by a charge registered on the title of the borrower's property. Two common loan agreements are a Mortgage Commitment and Promissory Notice, which can be found on the matter plan. The Land Registration Reform Act, R.S.O. 1990, c. L.4 allows ...

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The Torrens land title system is based on the registration of interests and confers absolute proof of ownership subject to notices registered on title. As some interests in land cannot be registered the caution system enables such interests to be endorsed on title. While caution registration does ...

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Collateral mortgages are typically registered for an amount equal to 100% to 125% of the property value rather than the principal of the loan. This allows the lender to advance additional money under the charge security up to the registered amount without requiring the borrower to refinance the ...

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The borrower may pledge collateral in addition to the charge on title to real property as security for the mortgage. This additional security may include assets such as accounts receivable, a general assignment of rents, personal guarantees, or the borrower's personal property. The collateral is ...

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A vendor take-back (VTB) mortgage refers to a mortgage provided by the vendor of the property to the purchaser for a portion of the purchase price. The terms can be incorporated into the agreement of purchase and sale, or a VTB can be agreed on between the parties after the agreement was accepted ...

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When a charge is already registered on title, any subsequent charge is often referred to as a second mortgage. To register a second mortgage, the second lender may need the consent of the first lender before using the property as security for the loan to be advanced. Consent is necessary when the ...

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A reverse mortgage allows the borrower to obtain money from the equity they hold in their property without having to sell. This type of loan gives the borrower access to equity up to 55% of the value of the property. The borrower pays back the mortgage in full when they move out, sell the property, ...

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Under the Torrens land titles system there can be no legal mortgage without registration. However, once executed, there is an equitable mortgage pending registration. There are variants of the equitable mortgage but in essence the two types are:

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A loan agreement is a contract. If the loan agreement provides that repayment is on a specific date, that is the date for repayment for the purposes of a contract dispute. Early or late repayment will be a breach of the contract and may be subject to prepayment charges or other legal remedies.

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The standard mortgage documents typically included in a private mortgage transaction are as follows:

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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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Charges, discharges, and mortgage amending agreements can be registered electronically via Teraview. The electronic registration process for each instrument has its own requirements which are to be satisfied before the instrument may be registered and certified on title: Electronic Registration ...

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

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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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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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Once the borrower repays the mortgage inclusive of any interest, costs, and fees, the lender discharges the charge security. The Discharge of Charge instrument in Teraview must be used and once registered, the property ceases to be encumbered by the security in favour of the lender. See the ...

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It is standard procedure to write to the lender to arrange discharge of the mortgage security they hold on the borrower's property. In response the lender typically forwards the borrower's lawyer a document outlining the balance of the mortgage amount due, if any, inclusive of any fees or costs ...

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The lender holding a charge on title to the borrower's property as security for a mortgage has an interest in the land which the lender may transfer or assign. The Land Titles Act permits the registered owner of a charge to transfer that charge to another party: s 101(1). On registration, the ...

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The terms or provisions of a mortgage may be varied or amended by agreement between the lender and borrower. Under s 71 of the Land Titles Act a Notice of Agreement Amending Charge may be registered on title to the property. Both parties are required to consent to the registration of the ...

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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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A default usually arises when the borrower fails to make payment to the lender in accordance with the terms of the loan agreement. A default can also relate to the borrower's performance or observance of the mortgage covenants, such as the borrower failing to maintain home insurance on the secured ...

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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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The lender has the statutory right during the borrower's mortgage default to commence a power of sale pursuant to the Mortgages Act s 24. If there is no power of sale provision in the mortgage, a lender may exercise a statutory power of sale under Part II of the Act 3 months from the ...

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Section 7(a)(iv) of the Mortgages Act gives the lender the power to take quiet possession of the secured property on the borrower's default. The borrower may vacate the property voluntarily. If they do not, the lender must commence proceedings for possession of land. The lender will obtain a ...

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This is a process by which the lender obtains an order from the court that transfers the title to the secured property to the lender and the borrower’s right to redemption is extinguished. Transfer of the property to the lender is full satisfaction of the borrower’s debt. The lender can then hold ...

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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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