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
46 | mbabc.ca MORTGAGEBROKER demandloans New Law on Limitation Periods YOU LENT $100,000 to your child and your child's spouse to help them purchase a matrimonial home. ey signed a promissory note that states the loan is payable on demand. Ten years later the couple divorces. You demand repayment of the loan but payment is not received. You sue. Good thing you papered the transaction. e Court will understand a loan was intended, not a gi . You will for sure win the case, … r-i-i-i-i-ght? Wrong! e BC Court of Appeal, on December 22, 2014 in Kong v. Saunders, on very similar facts, found the limitation period to bring a lawsuit to collect the debt had run out. e parents could no long sue to recover their money. A limitation period is how long you have to bring your lawsuit. If you don't sue within the limitation period, your right to sue will expire. Limitation periods, not lawfully set elsewhere, are governed by the Limitation Act. British Columbia as of June 1, 2013 has a new Limitation Act. It very much changes limitation periods concerning demand loans. Under the old law the limitation period in which to start a court action to collect a debt was six years, under the new law the limitation period is two years. Under the old law, the limitation period began to run on a demand loan from the date on which the right to bring a lawsuit arose. Under the new law, the limitation period begins to run on a demand loan a er: • the demand for repayment is made; and, • the debtor fails to perform an obligation. In the Kong case, the Court found that the parents had the right to sue on the debt from the date the promissory was made and the lawsuit had not been started within the six years following. Time had run out. Under the new law, the parents would not have lost on the issue of the limitation period running out. ey had started their lawsuit within two years of demanding repayment. If, before the limitation period runs out, the debtor acknowledges (in signed and written form) the debt, the limitation period starts to run again from no sooner than on the date the acknowledgement was made. No doubt many demand loans exist in the community. Limitation periods for those determined under the old law may produce very diff erent results from those determined under the new law; practically speaking, the debt may be uncollectable under the old law but very collectable under the new law. Limitation periods for demand loans determined under the old law may produce very diff erent results from those determined under the new law BY RAY BASI DIRECTOR OF POLICY AND EDUCATION BY RAY BASI DIRECTOR OF POLICY AND EDUCATION