Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/309414
legalprinciples MortgageBroker mbabc.ca spring 2014 | 27 Mortgage Enforcement in British Columbia Understanding the legal principles that govern mortgage enforcement in B.C. BY ANDREW BURY A MORTGAGE IS "A CONVEYANCE OF PROPERTY as a security for the payment of a debt or the discharge of some other obligation for which it is given, the security being redeemable on the payment or discharge of such debt or obligation." 1 A mortgage is comprised of two parts: • A promise to satisfy an obligation (usually, pay a debt) (a "Covenant"); • A conveyance of property 2 as security for the Covenant (a "Charge"). What does a mortgage charge? Although mortgages most commonly charge only real property (land), the Charge can be over any type of property: real property, personal property, incorporeal property, or any combination of those. Mortgages of real property are exactly that; the Charge gives the lender as security for the Covenant an interest in the land and buildings and fi xtures (which at law are treated as part of the real property), and nothing more. What rights does a mortgage lender have? From a lender's perspective, a mortgage is essentially security for money lent. Lenders have rights against the parties to the Covenant (rights "against the person" or Rights in personam) and they have rights against the property that is the subject of the Charge (rights "against the property" or rights in rem). 1 21 Halsbury, Laws of England, lst ed. (1912), p.70 2 or, arguably, now only a charge on property as a result of section 25 of the BC Land Title Amendment Act, S.B.C. 1989, ch. 69 Rights in personam ere is one principal legal remedy for lenders enforcing rights in personam; they are enforced through the Court by Judgment. Covenants are then merged in Judgments and lenders have the (o en unsatisfactory) methods of enforcing (or "executing on") Judgments, available to any other successful litigant. Exigible property of the parties to the Covenant (then "Judgment debtors") may be sold, by the Court Bailiff or otherwise (if any such property can be found). And Orders of the Court may be obtained requiring Judgment debtors to make payments in satisfaction of Judgments. Rights in rem ere are two remedies for lenders enforcing rights in rem; sale or foreclosure. Sale By far the most common method of enforcing rights in rem is by sale through the Court in a legal proceeding (a Foreclosure Proceeding) commenced by a lender to enforce a mortgage. Ownership of real property is fairly certain and simple, because of the Torrens land title system in British Columbia. Property cannot be moved out of the jurisdiction or otherwise hidden. And there is always a reasonably active market for property. p26-29_MortgageEnforcement.indd 27 14-05-08 2:31 PM