Borrower’s Private Mortgage - Closing Documents explained in Layperson's Terms

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By: Winnie J Luk

Retainer Agreement

The Retainer Agreement confirms that the Borrower has hired the lawyer to act for his/her/their private mortgage transaction and the terms under which the legal services are offered.

Client Verification

This form seeks to gather identification, contact, and work information from the Borrowers as required by lawyers under the rules of the law society.

Mortgage Commitment (Loan Terms)

The Mortgage Commitment sets out important terms of the loan such as: loan amount, interest rate, term, lender’s fees, conditions, closing date, and security.

Certificate of Independent Legal Representation

  • The Certificate of Independent Legal Representation confirms that the solicitor representing the Borrower is not the same solicitor representing the Lender and independently advised the Borrower about the liabilities incurred by the mortgage; and
  • Borrowers signed mortgage documents voluntarily without coercion and with full knowledge of the matters contained in the mortgage documention.

Acknowledgement and Direction Re: Charge

In this document, the Purchaser authorizes the lawyer to electronically register the mortgage in favour of the lender on the title deed for the condo unit with the Land Registry Office.

Acknowledgement Re: Standard Charge Terms

This document acknowledge’s that the borrower has received a copy of the Standard Charge Terms (SCT) for the mortgage. The SCT for a mortgage generally include (but may not be limited to):

  • lender has right to register mortgage on property title with Land Registry Office
  • borrowers title to the property is lawful
  • borrower is to maintain the property/repair/pay taxes
  • borrower promises to pay mortgage payments and lender can sue for shortfall
  • Interest is compounded when there is a default – (ie double interest)
  • lender can initiate a power of sale after a specified number of days after payment default. After property is sold under a power of sale, if there is still any loan balance outstanding, the lender may sue the borrower to recover any deficit.
  • lender can have the right to distrain or seize personal assets located on the mortgage property

Above are some common terms in the SCT. However, every lender has their own set of SCT.

Statutory Declaration

The Borrowers must declare (amongst other things):

  • marital status for the Family Law Act statements on the Property Deed,
  • that the land isn’t subject to any subdivision application,
  • mortgage proceeds are not being used to finance a building mortgage, property alterations or construction,
  • there is no nor will there be a construction lien on the property for at least 45 days after mortgage funds are advanced, and
  • that Borrower is aware that the lender is relying on this statutory declaration in advancing funds to the Borrower.

Direction re Mortgage Advance

In this document, the Borrower directs the Lender to make mortgage proceeds payable to the Lender’s lawyer in trust and authorizes Lender’s lawyer to deduct (as applicable):

  • Interest to the interest adjustment date,
  • tax arrears,
  • legal fees and disbursements,
  • title insurance, and mortgage registration fee,
  • and to advance the balance to the Borrower’s lawyer in trust.

Solicitor’s Undertaking Re: Property Taxes

If Property Taxes are in arrears, Borrower’s solicitor must use proceeds of the mortgage advance to pay off such debts prior to advancing mortgage funds to Borrower.

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Winnie J Luk, BA, JD, MBA, founder of Landmark Law, is a seasoned Ontario lawyer practicing in Wills and Estates, Real Estate, and Business Law and frequent speaker of free legal education seminar.