44 | fall 2017 cmba-achc.ca CMB MAGAZINE
O
ntario private mortgage lenders, take note: New provisions in Ontario's
Forfeited Corporate Property Act create some serious risks for lenders who
deal with corporate borrowers.
ese changes, which came into effect on December 10, 2016, with a transition
period requiring full compliance by December 10, 2018, give the government new statutory
powers to cancel valid mortgages three years aer a corporation holding title to mortgaged
real estate is dissolved, either through voluntary or involuntary dissolution processes.
e challenge is that mortgage lenders may not be aware that one of their corporate borrowers
has dissolved, as many corporate business arrangements involve multiple related companies,
some of which earn revenue and make mortgage payments, while others simply hold title to the
real estate, which is mortgaged. It is possible for the company holding title to the real estate to
dissolve, while the other related company continues to make mortgage payments. is creates
Lending on
Borrowed Time
A recent tweak to
Ontario legislation could
put a secretly ticking clock
on corporate mortgages
BY sAmAnthA gAle,
CmBA exeCutive direCtor
