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/505959
44 | spring 2015 mbabc.ca MortgageBroker e Ultimate Limitation Period: A condo- minium builder fails to put rebar in the concrete foundation of a building which is completed in September 2013. e strata corporation notices the cracks in the foundation in September 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 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 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 that trigger additional two-year limitation periods through written acknowledgements by debtors. e two- year limitation period can start to run afresh if a debtor, or other person with a liability, acknowledges 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 – so they are worth a review. limitationperiods