Postponement Privilege

(Ontario)

Question:

I could not understand the Postponement Privilege .  

Answer:

Someone advances a second mortgage. It’s supposed to be in second position.

This particular privilege permits the Owner to refinance the first with an agreement that the second will stay in the second position.

If this clause was not contained in the Second Mortgage, then, the Owner could never refinance the first with another institution. Once the existing first is discharged, the second moves up and automatically becomes the first. So, at that point the Second needs to sign a Postponement Agreement saying that even though I am technically registered in first position, I agree to be treated as if my mortgage followed the next registered mortgage.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com