mortgagemonies mortgagemonies
MortgageBroker mbabc.ca winter 2015 | 31
notary for the borrower.
• e condition was never met and so the
lender's right to withdraw the money was
never lost.
• At the time the funds were misappropriated,
the money still belonged to the lender.
• e borrower at no time was in control of
the funds and could at no time order the
notary for the borrower to release the money
to the borrower.
• Technically, the notary for the lender
breached the lender's instructions but the
system relies on the professional integrity of
the notary for the borrower to see that the
conditions (and undertakings) are fulfilled.
e main basis for the Court's decision
was that it could not be said the lender
ever advanced funds to the point where the
borrower had the right to call for the funds
for the borrower's own benefit. e mortgage
therefore was not funded to the mortgagor and
the mortgage is invalid.
The war
Having lost the case, can the lender still win
overall? Yes, it is possible.
In the Lin case, the court noted, "e
practise of the plaintiffs' notary has been closed
by the professional organization for notaries and
both the (borrower) and the (lender) have made
claims through the insurance fund for notaries."
e borrower reaps the rewards of having
won the case: the mortgage would be struck
from title and the lender is to pay the borrower
"ordinary costs" in the court case. Receiving
ordinary costs in the court case would not
fully indemnify a borrower for the legal bill;
generally ordinary costs amount to 30 to 50
per cent of the likely amount the borrower was
charged for legal services.
e lender, on the other hand, would
presumably have the benefit of claiming from
the misappropriating notary's insurance plan.
is potentially could include all of
the following:
• e amount of mortgage money lost;
• e amount of costs paid to the borrowers;
• e amount the lender was charged for
legal services.
e possible result therefore is that the
winner of the case will suffer a loss but the
loser of the case will not suffer a loss.
Given the decision in the Lin case and
the role of insurance, it may be a good time
for notaries/lawyers, mortgage brokers and
their clients to re-examine conveyancing
instructions and practice.
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