Legal Blog

Mortgage Statement

2544176 Ontario Inc. v. 2394762 Ontario Inc. 2021 Ont SCJ

A mortgagor, who was attempting to sell the mortgaged land at the same time as the mortgagee was attempting to do so under power of sale, requested a discharge statement pursuant to section 22(1)(a) of the Mortgages Act. The mortgagee refused to supply it for reasons of its own, which were not acceptable to the judge. The mortgagee then sold the land and the mortgagor moved to set aside the sale. Under section 22(3), if a mortgagee does not give the requested mortgage statement, its rights to enforce the mortgage are suspended until the mortgagee complies with its obligations. The real consideration for the trial judge was not whether the mortgagee would be prejudiced if the sale were set aside, but whether its unknowing purchaser should have its purchase taken from it through no fault of its own. Ultimately, the judge decided that the purchaser had to take title subject to the Mortgages Act and had to accept the risk of the breach that occurred.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.