Mortgage
A mortgage is an interest given on a piece of land, in writing, to guarantee the payment of a debt or the execution of some action. When having to pay out that mortgage to remove it from the title of a property, it is crucial to be aware of discharge fees, prepayment penalties, repayment of any cashback incentives, legal fees, and property tax adjustments.
Banks offer various types of loan products, but as long as those loans are secured against real property in BC, they are normally all considered mortgages.
There can be a lot of confusion when people have a line of credit. If that line of credit is secured against your home, it is called a Home Equity Line of Credit. A Home Equity Line of Credit (HELOC) is a secured form of credit where the lender uses your home as a guarantee that you’ll pay back the money you borrow. Home equity lines of credit are revolving credit—you can borrow money, pay it back, and borrow it again, up to a maximum credit limit. In short, a HELOC is a mortgage, so when clearing a title, you will need to pay out and discharge that HELOC. Even though a person may never have drawn from that HELOC, there will likely be discharge and administration fees owed to the lender for the paying out and discharge of that HELOC.
An “all monies” mortgage is a mortgage that secures all amounts owed to the mortgagee under any loan, credit facility, guarantee or money judgment (including future obligations) regardless of how they arise. For instance, some banks offer credit cards that can be secured against a home. Those credit cards will also need to be paid out and discharged upon sale.
Some people have an inter-alia mortgage, which is a mortgage that is secured by more than one property. If you are only going to sell one of those properties, contact your bank beforehand to see how much you can pay them to discharge a single property mortgage. Often, the bank will only ever discharge the inter-alia mortgage when the loan is paid out entirely.
There are instances where mortgages remain on a title even though the borrower paid it off many years ago. When a homeowner pays off their mortgage on their own (i.e., it was not by the real estate lawyer or notary public during a sale or refinance), banks will prepare and execute the appropriate discharge documents and forward them to the homeowner. The homeowner is then supposed to file that paperwork at the appropriate land title office. However, homeowners often do not bother visiting the land title office—thus, the mortgage remains on title. If you still have the originally executed discharge paperwork, give it to your lawyer so they can file the discharge on your behalf. If you do not have it, contact your lawyer immediately so the lawyer can contact the bank. It may take longer than normal for the bank to respond, as the mortgage account was closed awhile ago and will not be in their present system.
Property Tax Deferment
For seniors (55 or older), widows/widowers, and persons with disabilities, owners may be able to defer the payment of their annual property taxes (at a low-interest rate). If you have applied to have your property taxes deferred and the application was accepted, a restrictive lien will be registered against your home. When you sell your home, you will have to pay the outstanding property taxes in order to clear that lien.
Government Debts
If you owe money to the government (i.e. income taxes, MSP premiums, outstanding property transfer taxes, etc.), the government may file a lien against the property. The debtor cannot sell or mortgage the land until the lien is paid.
Judgment
In the context of real estate, a judgment is essentially an order made by a judge whereby a debtor is required to pay the judgment holder a specific amount of money. To enforce that judgment, the judgment may be registered against the debtor’s property. The debtor cannot sell or mortgage the land until the judgment is paid. This registration is good for two years and can be renewed every two years for up to a decade. Besides the amount owed under the judgment, you may also have to pay the accrued interest and the legal fees associated with enforcing and discharging the judgement. If you see a judgment that you do not agree with, you should contact a real estate lawyer immediately (i.e. prior to accepting any offers) to go over your options.
Certificate of Pending Litigation
A Certificate of Pending Litigation (CPL) is a charge that can be registered against a property that advises prospective buyers that a piece of property is subject to a lawsuit. It is very common for spouses who are in the middle of a separation/divorce to instruct their family lawyer to register a CPL to prevent the other spouse from transferring/selling their share in a property to another party. Although a CPL does mean that a party obtained a court order, the effects of a CPL tying up a property are virtually the same as registering a judgment on a title.
Besides the amount owed under the CPL, you may also have to pay the accrued interest and the legal fees associated with enforcing and discharging the CPL. If you see a Certificate of Pending Litigation that you do not agree with, you should contact a lawyer immediately (i.e. prior to accepting any offers) to go over your options.
Builders Lien
A builders lien is a lien on land. It secures a claim for payment for work done on—or materials supplied to—a construction project, repairs, or renovations made to an existing structure. When a lien is registered in the Land Title Office, it becomes a charge against the title to the land or property involved.
Besides the amount owed under the builders lien, you may also have to pay the accrued interest and the legal fees associated with enforcing and discharging the builders lien. This discussion specifically relates to people selling their not-substantially removed home. There are builders lien issues that developers and builders will have to deal with, but that is beyond the scope of this blog post. If you see a Builders Lien that you do not agree with, you should contact a litigation lawyer immediately (i.e. prior to accepting any offers) to go over your options.
Non-Financial Charges
Though the seller can remove financial charges, non-financial charges usually remain on title despite a transfer of ownership. Many of these non-financial charges affect how an owner can use or build on the land/property. Examples include statutory rights-of-way, easements, covenants, and building schemes.
The standard Contract of Purchase and Sale already takes into account some exceptions to a seller’s obligation to provide clear title. If a Buyer is demanding that a non-financial charge be cleared, speak with your lawyer before agreeing to do so.
Conclusion: Order a Title Search BEFORE Listing!
When considering listing your title, you may want to order a title search of your property to see what charges are actually registered against your home. If you see a Judgment or Certificate of Pending Litigation or Builders Lien that you do not agree with, you should contact a real estate lawyer to go over your options. This should be done BEFORE accepting any offers to purchase.
