MortgageBroker mbabc.ca fall 2014 | 45
protectingrights
BCLI proposal itself would cause him to stop
lending on the security of strata units in older
buildings. Other lenders also expressed similar
concerns over lending on older strata units if
the proposal was implemented into law. Elim-
inating the current rights of mortgage lenders
to veto strata corporation terminations would
therefore adversely impact the public, by reduc-
ing access to and increasing the cost of mortgage
funding for strata lots in older buildings.
e
MBABC considered many compromises
to the
BCLI proposal, including splitting the
one strata lot vote between the owner and
mortgage lender or lenders in proportion to
their relative equity interest in the strata lot.
is however, may prove to be a complicated
task, which is unlikely to achieve the
BCLI
goals of ensuring that strata corporations can
more easily terminate when they need to.
Balancing the interests of owners who want to
cut their losses with a strata corporation wind-
up and sale to a developer while protecting
the rights of other interested parties, such as
mortgage lenders is obviously not an easy task.
However, the
MBABC did propose a
compromise: that the
BCLI consider amending
its proposal by requiring the consent to
termination only for mortgage lenders, but not
for other charge holders.
Mortgage lenders can be distinguished from
other charge holders, such as holders of builders'
liens, judgments or restrictive covenants, in
that mortgage lenders enter into a carefully
considered agreement with owners to lend funds
based upon the value of and equity in the strata
lot (
LTV). is is a critical and primary element
of any mortgage agreement. Other creditors with
registered financial charges seek to secure monies
owed to them against a property title only aer
the property owner has defaulted in some way
on a financial obligation. ese creditors may be
fortunate and find a debtor with property to assist
with debt recovery but this is not a consideration
when the property owner enters into an initial
relationship with the creditor. is rationale
justifies a greater level of protection for mortgage
lenders over other charge holders.
•
Mortgage
lenders
could be
distinguished
from other
charge
holders.
