Mortgage Broker

42 | summer 2018 cmba-achc.ca CMB MAGAZINE the concrete foundation of a building which is completed in September of 2013. e strata corporation notices the cracks in the foundation in September of 2029. Can the strata corporation sue once it discovers the cause of the cracked foundation? No, it is precluded from taking action against the builder to recover any damages as the 15-year ultimate limitation period expired the year before the cause of the cracks was discovered. So how does the Limitation Act apply to demand loans? As most industry members already know, demand loans have no fixed date for the repayment of the loan. Under the former legislation, demand loans were subject to a six-year limitation period, regardless of whether a demand had ever been made under the loan. is meant that no creditor could collect under a demand loan without making a demand, experiencing a default and then initiating litigation if more than six years passed from when the loan was first entered into. Now the limitation clock for demand loans is shortened to two years from six, but it makes more sense, as the clock only starts ticking once a demand has been made under the loan and the debtor has failed to perform. For instance, a parent could lend the sum of $200,000 to a daughter on October 1, 2013, and then make a demand to have the money returned upon his or her retirement in January of 2020. If the daughter fails to pay the sum, then the parent must commence civil action against the daughter by January 2022. is provides greater certainty and fairness for parties granting demand obligations. Mortgage lenders may want to know that there are provisions which trigger additional two-year limitation periods through written acknowledgements by debtors. e two- year limitation period can start to run afresh should a debtor or other person with a liability acknowledge the liability within the original two-year limitation period. If a debtor acknowledges interest, under section 24(2) of the Act, the acknowledgement will also cover claims for outstanding principal and interest falling due aer the acknowledgement is made. If a case involves a claim for a liquidated sum, part payment of the liquidated sum by a person who is the subject of the claim will amount to an acknowledgement triggering a fresh two-year limitation period. In addition, a debtor's part payment or performance of an obligation under a security agreement is an acknowledgment by the debtor of liability in respect of a claim by the creditor for realization on the secured collateral. Comprehending the specific details of statutory provisions can be a challenge, and industry members will of course still need to have lawyers analyze the merits and limitation issues involved in any claim. However, these new limitation period changes deliver good news for everyone! caseanalysis under the previous act, there were a variety of limitation periods. now, for most civil claims, there is just one two-year limitation period requiring that civil claims be brought within two years of the facts constituting a claim become known to a plaintiff. BAcKGroUNd you make a loan to a friend for a year. At the end of the year the friend says funds aren't available to pay you; you agree to extend the payment date for a year. This happens repeatedly for years until finally you bring court proceedings to collect your money. By then the time the law allows for bringing your lawsuit (that is, the limitation period) has expired, if the time is calculated from the end of the first year of the loan when the borrower breached the loan terms by not repaying the loan. However, the time has not expired if the time is calculated from the last time you agreed to extend the due date. Which is it – are you out of time and the debt is no longer enforceable or will the court make an order in your favour enforcing the debt? Importantly for lenders, it used to be the former but niCe Guys Don'T alWays Finish lasT Gratuitous extensions of loans may extend limitation periods By rAy BASi, ll.B., StAff edUcAtioN ANd policy reView

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