In our practice, we routinely deal with mortgages in the course of all types of residential real estate transactions. The term “mortgage” refers to the nature of the registration against title to a property rather than the actual credit facility that the borrower has taken out from a lender. In British Columbia, the Land Title Act, s. 231(1) states as follows:
Subject to other applicable provisions of this Act being complied with, a mortgage that complies with this Division operates to charge the estate or interest of the mortgagor to secure payment of the debt or performance of the obligation expressed in it, whether or not the mortgage contains words of transfer or charge subject to a proviso for redemption.
When a client has sold a property or is in the process of refinancing, we often are tasked with obtaining a payout statement and discharging any financing registered against the property. When we ask for the account number associated with the mortgage, we will often have clients indicate that they do not have a mortgage against the property but rather a line of credit. From a legal registration perspective, the mortgage is the instrument that attaches to the title to secure the underlying debt facilities. Therefore, the process of discharging the mortgage is the same, whether it be a fixed loan agreement, a revolving line of credit facility, or some combination of the two.
Mortgages come with a set of rights in favour of the lender and obligations placed on the borrower. They do vary mortgage to mortgage, so it is important for the borrower to understand the nature of their particular loan and the security they have granted.
Similarly, if a client is purchasing property, we will often ask for information about their financing to be registered against the property in order to complete the purchase. In most cases, this financing is completed by the intended lender providing us with mortgage instructions directing us to prepare, arrange for signing and register a mortgage against the property to secure obligations that the client has to the bank. Frequently, we will do this on behalf of the lender and the borrower with both parties providing consent to us acting in that situation. The underlying credit facility the borrower has agreed to accept from the lender could be a fixed term conventional loan or it could be a revolving credit facility. On the lawyer’s side, the documents that would be prepared to secure the obligations associated with that debt against the property would be a mortgage and, when registered, the title would show a mortgage being registered against that particular property.
It is important for clients to understand the nature of these documents and the obligations take on which is a combination of getting clear information from the lender in the course of the application and approval process, as well as understanding the means in which those obligations are attached to the property.
Author: Una Gabie
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of real estate law at the following: Una Gabie: firstname.lastname@example.org Jennette Vopicka: email@example.com Danielle (Dani) Brito: firstname.lastname@example.org Jane Otterstrom: email@example.com Sasha Platz: firstname.lastname@example.org