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Tag Archives: lenders

Supreme Court of Canada decides that substance trumps form in the application of the Section 8 Interest Act prohibition on higher default interest to an incentive rate mortgage

Posted in Commercial, Policy, Residential

In Krayzel Corp. v. Equitable Trust Co., 2016 SCC 18 (“Krayzel”), the Supreme Court of Canada held that an interest rate increase that was structured as a lower rate in the absence of default infringed Section 8 of the Interest Act (Canada). In its analysis, the majority decision looked at whether mortgage loan that offered a lower rate of interest where there was no default is in substance the same as imposing a higher interest rate after a default. It ultimately found that framing the higher rate of interest as part of an incentive to avoid a … Continue Reading

Lenders and Execution Creditors Take Note! The Importance of Searching for Writs of Execution on Loan Advances & Providing Actual Notice of Same

Posted in Construction, Policy

Lenders advancing funds in stages or draws to a mortgagor should pay particular attention to searching for execution judgments against the mortgagor prior to advancing such funds. This is particularly common in construction loans whereby lenders will be making a series of advances over time.   Once a lender has registered its mortgage prior to the initial advance to ensure its priority on title, this is not necessarily the end of the matter. On subsequent advances, while it is important to search title to the property to determine if there are any registrations of concern, such as construction liens, it is … Continue Reading

How Does Real Estate Security Differ Between Canada and the U.S.? The Power of the Private Power of Sale.

Posted in Municipal

A few weeks ago, I blogged about one of the key differences between taking security in Canada as compared to the US, which is a question I’m often asked by lenders when working on cross-border transactions. As a follow up to that post, I’m going to discuss one other reason why lender rights are generally a bit more robust in Canada than in the US: the option of private power of sale that’s available in Ontario.

A private power of sale in Ontario allows a lender to (on not less than 15 days after default and 35 days’ notice) sell … Continue Reading

How Does Real Estate Security Differ Between Canada and the U.S.? Good News for Canadian Mortgagees.

Posted in Municipal

US lenders in cross-border M&A transactions often ask how real estate security differs in Canada. The short answer is “not much”. The security and legal requirements are pretty much the same, though perhaps not as heavily negotiated and labyrinthine as US-style documentation.

The best news, however, is what’s unique about Canada as compared to the US, including the fact that certain important aspects of Canadian bankruptcy laws are considered to be more “creditor-friendly”. An example of more “creditor-friendly” treatment is the absence of “cram-down” (and “cram-up”) provisions under Canadian bankruptcy laws. Under Canada’s two main insolvency regimes, a restructuring plan … Continue Reading