When a lender, be they a large bank or a private individual,
lends money to someone they will, in most cases, require security
for that loan. One well-known type of security is the mortgage. A
mortgage, otherwise known as a charge, is a lien or encumbrance on
the property, giving the lender certain rights over the property if
the borrower fails to comply with his or her obligations.
Mortgages in Ontario are governed by a couple of different laws,
primarily the Mortgages Act, the Land Titles Act
(or the Registry Act in a very small number of cases), and
the Land Registration Reform Act.
The legislation noted above outline certain rights and
obligations for both the lender and the borrower. For example, the
borrower must make mortgage payments as required by the mortgage
loan, and so long as the borrower complies with his or her
obligations the lender must let the borrower use and enjoy the
The rights and obligations set out in the law itself are very
limited. Because of this, specific terms are added to a mortgage at
the time of registration.
Realizing that many of these specific terms were being added to
each and every mortgage registered in relation to a specific
lender, the Land Registration Reform Act allows a lender
to file a set of standard charge terms. That way, each time a
mortgage is registered, the filing number for the standard charge
terms can be referred to, and the provisions of those terms are
incorporated by reference into the mortgage without needing to
attach all of the terms to the registered mortgage itself.
While it is very important for a borrower to be aware of the
standard charge terms, especially as the borrower must acknowledge
the standard charge terms at the time the borrower signs closing
documents, it is equally important for lenders to know what their
rights and obligations are in relation to that mortgage loan.
All of Canada's institutional lenders have developed their
own sets of standard charge terms. Most if not all lenders in
Ontario who have not filed their own standard charge terms
incorporate certain standard charge terms filed by Dye & Durham
in 2000. These charge terms, filed as number 200033, contain a
number of very important clauses to protect a lender's
interests. The Dye & Durham terms tend to be incorporated into
private mortgages because, in part, the vast majority of the other
standard charge terms are not generic, being drafted specifically
for one particular lender.
Unfortunately, the Dye & Durham terms do not contain certain
provisions now commonly included in standard charge terms filed by
Over the past number of months my office has developed and filed
an updated set of generic standard charge terms. These standard
charge terms, which can be used by any lender in Ontario, addresses
matters not found in the Dye & Durham document, including:
provisions for leasehold
clauses relating to interest-only
a prohibition on hazardous and
illegal substances, and environmental contamination
specific requirements for demolition,
alteration and construction financing
enhanced insurance requirements,
including life insurance upon request
clauses related to farm properties,
and the Farm Debt Mediation Act
extended foreclosure, power of sale
and receivership rights
additional language regarding the
payment of lender fees
the right of the lender to inspect
consent to delivery of notices by
equivalent interest rates, to comply
with the Interest Act
While the Dye & Durham standard charge terms continue to be
available, and serve Ontario lenders well, if you believe that you
or your clients could benefit from these new standard charge terms
please do not hesitate to contact my office to discuss further.
After all, not all loans are the same, and not all standard
charge terms are same either.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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