207 Form Of Postponement

FORMS

Priority Agreement

The director has approved two versions of the Form C Charge for Priority Agreements.

1. The Form C Charge (Priority Agreement), and
2. The Form C Charge

The Form 24 Postponement Agreement was cancelled on January 1, 2017.

Form C Charge (Priority Agreement)

The Form C Charge (Priority Agreement) is limited to applying for one or more of the Nature of Interest—Priority Agreement. When the Form C Charge (Priority Agreement) is used, Item 3 of the form populates the Nature of Interest field with “Priority Agreement”, and the “Additional Information” field is populated with the “Subsequent Charge” and “Prior Charge(s)” application numbers entered by the form drafter. Item 4(b) defaults to “Express Charge Terms Annexed as Part 2”, and Terms of Instrument—Part 2 are automatically appended. Theappended Terms of Instrument—Part 2 must be used.

The Terms of Instrument—Part 2 that are automatically appended include standardized granting language for a priority agreement that follows the granting language from the previously used Form 24. The automatically appended Terms of Instrument—Part 2 also contains two consideration fields applicable to the words of grant. The Consideration Value field defaults to $1.00 and the Description of Consideration field defaults to and other valuable consideration. These two fields may be edited where applicable. Additionally, “Subsequent Charge” and Prior Charge(s)” are defined in the Terms of Instrument—Part 2, by referring to the charge numbers provided by the form drafter and populated in the “Additional Information” in Item 3.

Where multiple priority agreements are applied for, each priority agreement results in a separate automatically appended Terms of Instrument—Part 2. The Terms of Instrument—Part 2 will be appended in the order they were applied for in Item 3 of the Form C Charge (Priority Agreement), and labelled consecutively with; Terms of Instrument #1, Terms of Instrument #2 etc.

Form C Charge

The Form C Charge must be used where:

• An applicant wishes to use their own priority agreement granting language.
• There is a mixture of the priority agreement Nature of Interest and other different Natures of Interest.
• The application number of the “Subsequent Charge” or “Prior Charge” is not known at the time the form is drafted. For example, the priority agreement is being filed as part of a package that includes the application for the “Subsequent Charge” or “Prior Charge”.

When a priority agreement is applied for on the Form C Charge, the Terms of Instrument—Part 2, with standardized granting language, is not automatically appended to the form.

On the Form C Charge, select Nature of Interest, Priority Agreement.

PRACTICE

Release of Priority Agreement

If a first mortgage, second mortgage, and separate priority agreement giving the second mortgage priority over the first mortgage are registered against title, and if either mortgage is discharged, the registrar also discharges the priority agreement whether or not any party makes an application to release it.

Priority Agreement in Instrument Creating Right of Way or Covenant

Where an instrument creating a right of way or covenant contains a mortgagee’s consent to a priority over their charge in favour of the right of way or covenant, an applicant must apply specifically for registration of the priority agreement in Form C Charge. The mortgagee granting priority must also sign the Form C Charge.

Priority Agreement Affecting More Than One Subsequent Charge

Each subsequent charge that is affected by a priority agreement is treated as a separate charge for registration purposes. In the case of a priority agreement in which one or more prior owners grant priority to one or more subsequent owners, the registrar assigns a separate serial number to each subsequent charge affected and makes a separate entry in the register for each one.

Application number of the “Subsequent Charge” or “Prior Charge” is not known

The Form C Charge must be used where the application number of the “Subsequent Charge” or “Prior Charge” is not known at the time the application for priority agreement is drafted. For example, the priority agreement is being filed as part of a package that includes the application for the “Subsequent Charge” or “Prior Charge”.

Where the application number of the “Subsequent Charge” or “Prior Charge” is not known at the time the application for priority agreement is drafted, it is acceptable to define the “Subsequent Charge” or “Prior Charge” in the Terms of Instrument—Part 2 as follows:

• by reference to a copy of the document that is attached to the Priority Agreement; or
• by defining the “Subsequent Charge” or “Prior Charge” by description; for example, granting the Statutory Right of Way charge with one registration number less than this priority agreement priority over mortgage CA12345.

Item 3 of the Form C Charge is intended to identify the type of charge applied for and optionally, the Additional Information field can be used to enter the applicable document reference identifying that part of the Terms of Instrument—Part 2 containing the grant of priority.

As noted above, the Terms of Instrument—Part 2 is where the Priority Agreement must be described, including sufficient descriptions of the “prior charge” and “subsequent charge” in accordance with s. 207 of the Land Title Act. Since the document reference provides a direct link to the portion of the Terms of Instrument—Part 2 containing the grant of the priority agreement, the granting language, or portions thereof, need not be repeated in item 3. Negating the requirement to repeat the granting language in Item 3 is especially helpful where the granting language defines the “Subsequent Charge” or “Prior Charge” by a reference to a copy of an attached instrument, or by description.

Limiting the description of the Priority Agreement to the Terms of Instrument—Part 2 removes the potential for defect notices associated with errors when repeating this information in item 3.

Where an application is limited to one or more applications for a priority agreement, and the Form C Charge (Priority Agreement) is used, the “Additional Information” is auto populated with the charge numbers for the “Subsequent Charge” and “Prior Charge” provided by the form drafter. The Form C Charge (Priority Agreement) cannot be used where the charge numbers for the “Subsequent Charge” and “Prior Charge” are not known.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

See Di Castri, Registration of Title to Land, vol. 2, §13:185, and vol. 3, §18:66, §20:27, and §21:9.

CASE LAW

Effect of Postponement of Possibility of Reverter

See the annotation for Westsea Construction Ltd. v. British Columbia (Registrar, Land Title Office), 1995 CanLII 1087 (BC SC), under s. 231 of the Act.

Postponement Agreement

The respondent, the fourth mortgagee on the subject property, brought an application for directions concerning the priorities of various mortgagees and for payment of funds resulting from the sale of the property. An agreement had been registered that granted the charges held by the fourth mortgagee priority over those held by the second mortgagee. No mention was made in the agreement of the intervening third mortgage. The third mortgagee was not given any notice of the agreement and was not asked and never consented to the arrangement. The fourth mortgagee did not pay out the second mortgage, buy out the interests of the second mortgagee, or take an assignment from the second mortgagee. All that the second mortgagee agreed to do was to postpone her interests to those of the fourth mortgagee. The court declined to grant the fourth mortgagee’s application for a declaration that its interests were ahead of the interests of the third mortgagee. It found that the agreement was actually a postponement agreement under s. 207 of the Land Title Act. Under s. 207(1), the owner of a prior charge, in this case the second mortgagee, may postpone her rights to those of the holder of a subsequent charge, in this case the fourth mortgagee, as if the prior charge were registered immediately after the subsequent charge. However, the Act does not provide for the holder of a subsequent charge to stand in the shoes of a prior charge holder and thereby vault ahead of an intervening charge. Accordingly, the priorities set out in the Act applied, with the result that the third mortgagee was to be paid from the funds in trust in priority to the fourth mortgagee, which because of the postponement agreement would rank ahead of the second mortgagee (Bridgewater Financial Services Ltd. v. 347451 B.C. Ltd., 2003 BCSC 716).