CMB MAGAZINE cmba-achc.ca winter 2019 | 35
mortgageinsecurity
T
here was a major review of British
Columbia's Employment Standards
Act (ESA) by the B.C. Law Institute
(BCLI). Contained in the midst of
the 325-page report was a recommendation
from the BCLI to amend a section of the
ESA, which would have the effect of whittling
away the concept of indefeasible title and the
priority interests of mortgage lenders. It would
have strengthened the super-priority of wage
liens, which represent the unpaid wages of
employees.
Essentially, super-priority liens entitle
the government to the equity in real estate
in priority to substantially all secured
creditors, including mortgage lenders. We
have written about super-priority liens in
previous articles. As an association, we are
extremely concerned about a government
trend towards fortifying super-priority
liens, which has the impact of weakening
mortgage security. Making mortgage lending
riskier for lenders only makes mortgages
costlier for borrowers. However the good
news is the BCLI listened to our concerns
and will not be proceeding with its wage
lien recommendations at this juncture. is
represents a clear victory for CMBA-BC
and the mortgage lending and brokering
community. Our rationale to BCLI is
explained below:
PROPOSED WAGE LIEN SUPER-
PRIORITY OVER MORTGAGE
ADVANCES
In this letter, we examined the proposed
changes concerning section 87, which
permits wage liens to have priority over
advances under:
n
a registered land mortgage, to the extent
the advances were made aer the Director
registered a certificate of judgement against
the land; and
n
PPSA securities, without any need for the
Director to register anything.
We understand that among the
monies included in wage liens are holiday
and vacation pay, and entitlements on
termination. e lien arises from the time
the wages become payable, even when the
determination that they are indeed payable
comes some time later. e lien, without
registration, is a secured debt. It survives a
sale of the employer's assets to a purchaser
buying in good faith, despite the lack of
need for registration or notification of its
existence.
A SMALL
VICTORY
ON WAGE
LIENS
Thanks to CMBA-BC's
efforts, the British
Columbia government
does not weaken
mortgage security
BY SAMANTHA GALE
