203 Floating Charges On Land

FORMS

Application in Form B

The use of Form B, in either electronic or hardcopy form, is compulsory. Hardcopy submissions are only accepted under the exemptions set out in the E-filing Directions at ltsa.ca under “Practice Info”, “E-filing User Guides and Publications”.

Fixed and Floating Charge

Where a lender wants to create a mortgage of specific land in addition to a floating charge, the lender must use a Form B to register the instrument creating them. The lender prepares the Form B by indicating in Item 6 that the mortgage contains a floating charge and by:

1. including the floating charge in a set of standard mortgage terms filed under s. 228 of the Act and incorporating the set by reference to its filing number;
2. setting out the floating charge provision in a schedule to the mortgage and completing Item 10 of Form B (Additional or Modified Terms) to reflect that, in addition to the set of mortgage terms incorporated by reference, the mortgage contains additional terms; or
3. attaching a set of express mortgage terms containing the floating charge provision pursuant to s. 225(5) of the Act.

The floating charge will not be registered unless proof of crystallization is provided with the Form B. If proof is not provided, the lender may subsequently apply for registration using a Form 17 with proof of crystallization attached. The lender will not need to re-submit the instrument creating the floating charge for registration so long as the lender cites its registration number in the Form 17 application. The registrar can retrieve the instrument from the records and conduct the necessary verification of the floating charge provision.

Floating Charge Only

Under s. 5(1)(d) of the Land Title Act (Board of Directors) Regulation, B.C. Reg. 332/2010, where a lender wants to register a crystallized floating charge only, the lender may use a traditional form of instrument and is not required to use either Form B or C. The lender makes application to register the crystallized floating charge in Form 17, which must be accompanied by both the instrument creating the charge and the proof of crystallization.

Uncrystallized Floating Charge

See s. 12(2) of the Personal Property Security Regulation, B.C. Reg. 227/2002, with respect to the registration of uncrystallized floating charges under s. 203(3) of the Land Title Act. This section provides:

• 12 (2) The following applies if an uncrystallized floating charge is being registered under section 203(3) of the Land Title Act:

• (a) if the registration does not relate to a security interest in personal property, the words “uncrystallized floating charge on land” must be entered;
• (b) if the registration relates to a security interest in personal property as well as to an uncrystallized floating charge on land, the entry required by this regulation for the personal property must be entered, and no entry is required respecting the uncrystallized floating charge on land.

PRACTICE

Proof of Crystallization

A floating charge is not capable of registration until it crystallizes. Section 203(6) calls for proof of crystallization in the form of a signed statement:

1. that the charge has crystallized; and
2. the circumstances under which the crystallization occurred.

As to crystallization, the signed statement may be based on opinion and belief. As to the circumstances, the signed statement must be based on personal knowledge.

Omission of Proof of Crystallization

Fixed and Floating Charge

A lender does not provide proof of crystallization with a Form B mortgage containing a floating charge.

If the lender wishes to register a floating charge, the lender tenders a Form 17 referring to the registration number of the mortgage together with the signed statement as to crystallization.

Floating Charge Only

Where a lender presents an instrument containing a floating charge only without the required proof of crystallization, the registrar rejects the instrument.

If the lender wishes to register a floating charge only, the lender tenders a Form 17 together with a signed statement as to crystallization and the instrument containing the floating charge.

Examination of Charging Provision

The registrar examines the charging provision in an instrument only when a lender applies to register the crystallized floating charge. Consequently, when a lender presents a Form B Mortgage form expressed to contain a floating charge for registration only as a mortgage of specific land, the registrar does not verify that the instrument does in fact contain a floating charge, or that it is effective to create a floating charge. However, when the floating charge crystallizes and the lender applies to register the floating charge against specific land, the registrar examines the charging provisions.

Proof of Execution

The execution of a traditional form of instrument creating a floating charge must be proved in accordance with Part 5 of the Act. If a lender chooses to register a crystallized floating charge against specific land, it is likely that this will be done some time after execution of the instrument. In this case, it may not be possible for the lender to obtain the necessary proof of execution, and the lender should consult with the registrar before applying to register the crystallized floating charge. If Part 5 has not been complied with, the registrar will require secondary evidence of execution in accordance with s. 49 of the Act.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Registration of Floating Charges on Land

See s. 239 of the Act regarding the registration of instruments containing floating charges.

Registration Does Not Render Interest Enforceable

See s. 26(2) of the Act, which provides as follows:

• 26 (2) Registration of a charge does not constitute a determination by the registrar that the instrument in respect of which the charge is registered creates or evidences an estate or interest in the land or that the charge is enforceable.