CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Miguel Manzano, Stikeman Elliott LLP
real estate loans, certain financial institutions are regulated by statute, with special provi - sions applying to foreign financial institutions, and mortgage brokerage legislation applying to lending on the security of real property in sev - eral provinces. For the registration of security, certain land title registries require foreign lend - ers to provide evidence of their existence and good standing. Others require foreign lenders to be extra-provincially registered with the provin - cial corporate registry or otherwise regulated by certain federal legislation in order to take secu - rity over real property in the province. Although mortgage interests may be exempt from restric - tions on foreign ownership of land, the act of realising upon security (or the ownership of the affected land for a period of time after realising upon security) may contravene such restrictions or result in a period of time in which the property must be disposed of. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Nominal registration fees apply to the registra - tion of a mortgage, an assignment of rents, a hypothec or any other registered real property security. Apart from typical legal and other enforcement costs, there are no specific registration fees pay - able in connection with the enforcement of secu - rity over real property. 3.5 Legal Requirements Before an Entity Can Give Valid Security While giving financial assistance has traditionally been legally restricted or prohibited, many Cana - dian jurisdictions have recently eased or elimi - nated the requirements. However, legislation in some provinces still contains express disclosure and reporting requirements. Even where financial assistance is not directly prohibited or restricted
by statute, directors must observe their fiduciary duty to act in the best interest of the corporation when approving such arrangements. In addition, when dealing with non-individu - als (ie, corporations, trusts, partnerships), the organisational documents may contain restric - tions or limitations on certain activities. 3.6 Formalities When a Borrower Is in Default Available Remedies In the common-law provinces, remedies for mortgage lenders generally include foreclosure, action on the covenant, appointment of a receiv - er, judicial sale, power of sale and possession. Power of sale is a sale of the mortgaged property by the mortgage lender without court proceed - ings or supervision, pursuant to either the provi - sions of the mortgage which expressly grant the lender the power to sell the mortgaged property upon default, or the applicable mortgage legisla - tion (a power of sale is not available as a remedy in all common-law provinces). In Quebec, analo - gous remedies include a personal right of action against the debtor, as well as the hypothecary rights of taking in payment, sale by a secured creditor, sale by judicial authority and taking possession for the purposes of administration. A lender is obliged to give “reasonable notice” before making a demand for payment and will generally be required to send notices under federal bankruptcy legislation before seeking to enforce its security over the interest in land. In New Brunswick, Ontario, Prince Edward Island and Quebec, the lender is free to sell the prop - erty privately by a prescribed process, while reserving the right to sue the borrower for any deficiency in the sale proceeds. In Alberta, Brit - ish Columbia, Ontario and Quebec, the lender can sue for foreclosure (resulting in title to the
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