CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Miguel Manzano, Stikeman Elliott LLP
property passing to the lender in full satisfac - tion of the debt). More commonly, most prov - inces also permit a lender to apply to court for a judicial sale of the property, with the borrower remaining liable for any resulting deficiency (sub - ject to certain exceptions in some provinces). While lenders will often seek to find a commer - cial solution for problematic loans (including by way of forbearance), in an environment of higher interest rates and reduced access to capital for some real estate investors, it appears that lend - ers are more willing in the current climate to pur - sue enforcement of their security. Timeframe The range of time for a lender to successfully enforce and realise on real property security will be highly fact-dependent; however, three to six months would not be unusual in uncontested cases where there is little to no equity in the project. 3.7 Subordinating Existing Debt to Newly Created Debt Certain statutory liens for property taxes, pen - sion deficits, construction liens or other statu - tory remittance obligations may have priority over secured debt, even if the secured debt was registered/perfected prior to creation of the lien. Otherwise, debt secured by registration may generally only be subordinated to new debt by agreement of the existing secured party. 3.8 Lenders’ Liability Under Environmental Laws Holding security will not generally expose a lend - er to environmental liability, although the value of the secured asset could be reduced if that liability arises during the term of the loan. Upon realising on the security and taking possession or control of the subject lands, a lender (or its
receiver) could be exposed to environmental liability. 3.9 Effects of a Borrower Becoming Insolvent If security interests are granted by a borrower on a legitimate bona fide basis, for good considera - tion, the subsequent insolvency of the borrower will not generally affect the enforceability of the security interest. However, the secured party’s enforcement proceedings may then be sub - ject to court oversight and associated delays. If security was granted for little or no consid - eration, or on any basis where the intent of the grant of security was to prefer certain debts over others, federal legislation imposes “claw-back” rules that could impair or invalidate the security. 3.10 Taxes on Loans As discussed in 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. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Provincial governments are responsible for land- use planning (other than on federal lands), but delegate most planning and zoning functions to municipalities. Much of the regulation of real property is in the form of zoning by-laws and building by-laws (informed by provincial poli - cies and plans, municipal official plans and plans d’urbanisme ).
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