Mortgages and Charges

For as long as there was the individual ownership of property, there were people who couldn’t afford it.

Basically, that meant that someone else had to lend money to the Buyer to enable the purchase.

Mortgages have two components:

  1. Promissory note, and
  2. Security in the land.

Under the Registry system, the owner would pledge the land as security for the loan. As part of that security, the Owner would transfer the deed as an essential component of the transaction. That really meant that the mortgagee was the actual owner of the property.

Under the Land Titles system, the Owner would acquire ownership by a Transfer and would offer security to a lender by way a lien, or Charge. There was no transfer of ownership to the mortgagee. The Owner remained the Owner.

This system worked relatively well until the significant environmental concerns in the 1970’s. Lenders really did not want to the “owners”, they didn’t need the extra risk. Simply having a lien on the property would be sufficient for the security which they required.

Land Registration Reform Act, 1984

The Land Registration Reform Act which was passed in 1984 changed most of these practices. In Registry, there was a Deed and a Mortgage. In Land Titles, there was a Transfer and a Charge. So, they simply consolidated each of them into one document.  There is a Transfer/Deed and a Charge/Mortgage. The documents are identical in all respects except for the description of the property. There, it will be either Registry or Land Titles.

As a result of the Act, the transfer of ownership of the property from the Owner to the Lender pursuant to a Mortgage in the Registry system was changed. Now, it’s just a lien whereas it used to be a transfer of ownership.

Obviously, this can be significant in terms of liability.

There are still Mortgages that were registered in Registry prior to the passing of the Land Registration Reform Act, 1984. They transferred title, and if they were renewed and never discharged then that arrangement continues.

Brian Madigan LL.B., Broker

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