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Mortgage Transactions in Electronic Registration

Is it necessary for a guarantor in a charge to sign a paper form of the guarantee?

Although the guarantor may be identified in the electronic form of charge, it would appear necessary for the guarantor to sign a separate paper form of the guarantee in order to bind the guarantor to the covenant.

Lawyers should ensure that the terms of the paper document signed by the guarantor are consistent with the provisions (if any) regarding the guarantee in the charge and the Standard Charge Terms.

Practice Guideline 5 - Electronic Closings and Mortgage Transactions

I am acting for a vendor of a property. There is a mortgage registered on title in favour of an institutional mortgagee ("the institutional mortgage"). The purchaser's lawyer has requested that I deliver my personal undertaking on closing to obtain and register a discharge of this mortgage as soon as is reasonably possible after closing. What are some of the issues that I should be considering?

  • The client's obligations under the terms of the Agreement of Purchase and Sale.
  • Some institutional mortgagees have developed a practice of preparing and registering electronic discharges of mortgages upon receipt of discharge funds without the assistance of the vendor's lawyer.
  • When requesting a discharge statement from an institutional mortgagee, lawyers should seek clarification on whether the lawyer or the financial institution itself will prepare and register the electronic discharge of mortgage.
  • If the institutional mortgagee indicates that it will be registering the discharge, the lawyer should obtain from the mortgagee written confirmation to that effect. In these circumstances and subject to any contrary provision in the Agreement of Purchase and Sale, a lawyer may be more comfortable changing the wording of the undertaking to provide that the lawyer "will cause a discharge of the mortgage to be registered ".
  • If the institutional mortgagee authorizes the vendor's lawyer to prepare and electronically register the discharge on its behalf, then the lawyer should be able to give the undertaking to obtain and register a discharge of the mortgage as soon as is reasonably possible after closing.

What are some of the additional responsibilities that a vendor's lawyer may be required to assume with respect to the discharge of institutional mortgages?

  • To deliver discharge funds to the mortgagee in a timely manner;
  • To ensure that the electronic discharge is prepared and registered by the mortgagee in a timely manner and if the mortgagee fails to do so, to apply to the court for an Order discharging the mortgage;
  • To ensure that registration particulars of the discharge are obtained and forwarded to the purchaser's solicitor.

Practice Guideline 5 - Electronic Closings and Mortgage Transactions

How should I deal with the discharge of "private mortgages"?

Private mortgages are mortgages held by corporations or individuals other than institutional mortgages as defined in The Adviser Supplement, Undertakings to discharge mortgages (September 1992).  

In the case of private mortgages, in the absence of any express provision to the contrary in the Agreement of Purchase and Sale , lawyers should not give nor accept personal undertakings to obtain and register discharges after closing.

Practice Guideline 4 - Electronic Closings and the DRA

How should I deal with the discharge of a "private mortgage" in a real estate transaction where the mortgage will not be paid out and discharged prior to closing?

The vendor's lawyer or the mortgagee's lawyer should seek written instructions from the mortgagee to create and electronically register the discharge. The prescribed form of Acknowledgment and Direction generated from the electronic registration system may be used for this purpose.

In addition the vendor's lawyer, acting on the written authorization of the mortgagee, could include the discharge of mortgage in the DRA as one of the documents to be registered on closing, subject to compliance with the escrow terms of the DRA.

Practice Guideline 5 - Electronic Closings and Mortgage Transactions

What is a compliance with law statement?

In the paper system some title documents must be accompanied by supporting evidence before they will be accepted for registration (e.g., transmission application). In electronic registration this supporting evidence is replaced by compliance with law statements. These statements can be made only by a person who is entitled to practise law in Ontario.

Practice Guideline 6 - Use of Compliance With Law Statements

Do I need to retain in my file the evidence upon which compliance with law statements are based?

Lawyers should either retain in their files the evidence upon which compliance with law statements are based or alternatively, they should ensure that the information necessary to fully support these statements is and will remain publicly available. In the electronic registration system, copies of supporting evidence will generally not be stored at the Land Registry Office and the copies retained in a lawyer's file may be the only source of such supporting evidence. This may be particularly important for a lawyer where a claim is made against the lawyer in consequence of any such statements.

Practice Guideline 6 - Use of Compliance With Law Statements

You are a busy real estate practitioner and you wish to retain a freelance conveyancer to create, sign and electronically register documents on your behalf.

You must comply with the Law Society requirements on delegation and supervision.

Only a lawyer may sign for completeness any document that requires compliance with law statements.

A lawyer may permit a non-lawyer to attend to all matters of routine administration in a real estate transaction, to assist in more complex transactions, to draft statements of account and routine documents and correspondance, and to attend to registrations. A lawyer, must not, however, delegate to a non-lawyer the ultimate responsibility for the review of documents before signing.

A lawyer who approves the electronic registration of title documents by a non-lawyer is responsible for the content of any document that contains the electronic signature of the non-lawyer.

Rules 6.1-1 and 6.1-6 and commentaries of the Rules of Professional Conduct, and By-Law 7.1.

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