225 Form Of Mortgage

FORMS

Mortgage in Form B

The director has approved the use of the Form B. The Form B is compulsory.

Submissions

The electronic Form B is available in Web Filing using a myLTSA Enterprise account.

Completion instructions for electronic land title forms are set out in the

• Directions for Completing EFS Forms; and
• Land Title Web Filing Form Practice Guides,

which are found at https://help.ltsa.ca/myltsa-enterprise/land-title-web-filing-form-practice-guides.

Additional Forms

An applicant may need to attach a Form D to the Form B to accommodate additional borrower signatures or a Form E to accommodate any terms for which there is inadequate space in the Form B.

The general provisions of the director’s E-filing Directions for electronic land title forms (available at https://ltsa.ca/wp-content/uploads/2020/10/E-filing-Directions.pdf) and the Director’s Requirements for Hardcopy Land Title Forms (DR 04-11, available at https://ltsa.ca/dr_04-11_hardcopy_land_title_forms) apply to Forms D and E. In addition, instructions for completing Form E and for attaching schedules to Form B are set out in the Completion Instructions for Hardcopy Transfer Forms at ltsa.ca.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

See ss. 20 to 24 of the Property Law Act regarding the liabilities of parties where an estate in fee simple subject to a mortgage is transferred.

CASE LAW

Mortgage Terms

The purpose of s. 225 is to simplify registration, to diminish paper flow into the land title office, and, perhaps, to encourage the use of a form of mortgage more understandable to lay people. The section does not have the effect of imposing the standard mortgage terms referred to in s. 225(5)(a) on the parties unless they agree to the contrary. In this case, the appellant’s promise in writing to give a mortgage only required him to transfer the land to the respondent subject to a proviso for redemption if he duly performed the obligation of payment and to covenant in the instrument to pay the sum of $100,000 in the manner specified. These two provisions were of the essence of a mortgage of land. Although the agreement did not specify the manner in which interest, set at 8% per annum, was to be calculated, the court found it was reasonable to presume in the absence of an express agreement that it was calculable annually and not in advance. Furthermore, applying the “officious bystander” rule, the court also concluded that the terms of the agreement obliged the appellant to covenant in the instrument of mortgage to pay the taxes. For the respondent’s part, the agreement obliged the respondent to covenant with the appellant for quiet possession for so long as the appellant observed the proviso and paid the taxes. Other frequent terms in modern mortgages such as a power of sale, a covenant against transfer to another, and even a covenant to insure, are not of the essence of a mortgage and thus could not be imposed by the court (Scully v. Cerney, 1996 CanLII 1992 (BC CA)).

The respondent, a second mortgagee, sought out an order in foreclosure proceedings that the petitioner’s first mortgage was invalid and that the respondent’s mortgage was thus entitled to priority. The petitioner’s mortgage clearly provided for potential future advances and acted as continuing security for advances granted up to a maximum principal amount. The principal amount of the mortgage was entered in Item 5 of Part 1. Items 5(b) to (i) and (l) contained the letters “WBD”, which were defined under the heading for Item 5 as “Will be determined by the Lender and the Borrower for each advance at the time of each advance”. Section 225(3)(d) of the Act provides that terms, required by regulation, be included in Part 1 of the mortgage, only if those terms are contained in the mortgage. Although the terms in Items 5(b) to (i) and (l) were not contained in the mortgage itself, Part 2 of the mortgage clearly stated that these terms were to be contained in each advance. Section 5(b) of the Director’s Requirements for Hardcopy Land Title Transfer Forms (formerly s. 6(b) of the Land Title (Transfer Forms) Regulation) provides for the use of abbreviations on a transfer form. In this case, it would have been misleading to enter interest figures for advances made under the mortgage at the time of registration because more advances could have been made at a later date at different interest rates. Therefore, the use of the letters “WBD” complied with s. 6(b) of the regulation. Their use was accurate and did “not obscure the meaning, intent or legal effect of the transfer form”. Further, the terms of the creditline agreements did not form part of the mortgage and were thus not required by s. 225(5) of the Act to be included in Part 2. Rather, the creditline agreements were obligations secured by the mortgage. Nothing in the Act says that a mortgage may only secure one obligation or that, by the introduction of the statutory mortgage form, the legislature intended to limit the types of mortgage that could be registered. The information provided in Parts 1 and 2 of the petitioner’s mortgage was sufficient notice to a prospective mortgagee to make further inquiries as to the exact amount owing under the mortgage on any given date after the initial advance. Accordingly, the mortgage complied with the requirements of s. 225(3)(d) and (5) of the Act, and the priority of the petitioner’s mortgage over that of the respondent was confirmed (Richmond Savings Credit Union v. Nijjer, 2000 BCSC 1150, affirmed 2002 BCCA 87).

Effect of Notice of Security

The petitioner and respondent were first and second mortgagees in bankruptcy proceedings. The petitioner sought an order nisi of foreclosure in an amount that included principal and interest. The respondent took the position that the order nisi should include no provision for interest because the documents filed in the land title office did not disclose a rate of interest on the petitioner’s first mortgage. The filed documents included a Form B and a schedule that added to and modified some of the standard mortgage terms. Read together, the standard terms and the schedule disclosed that the first mortgage secured principal advanced and interest under two demand promissory notes and a loan agreement, although neither the standard terms nor the schedule disclosed a rate of interest or the amount of principal advanced. The promissory notes and loan agreement were not public documents. Nothing in the Act or the regulations states or implies that a mortgage not in conformity with the Act or the regulations is unenforceable. The court inferred from the fact of registration of the first mortgage that the registrar considered it proper to accept the first mortgage for registration notwithstanding the use of “N/A” in the interest part of Form B. Ordinarily, the details of principal and interest that must be disclosed to conform with the regulation do not permit a member of the public to determine, at any time, from material filed in the land title office the principal and interest owed and therefore secured under a typical registered mortgage. When the respondent filed its subsequent mortgage, the respondent knew that the first mortgage secured monies advanced under the two promissory notes. Although the solicitors for the second mortgagee did not inquire before the foreclosure as to whether the first mortgage was in arrears, and if so the rate at which interest was accumulating, there was no suggestion that the first mortgagee would not have provided this information and copies of the promissory notes and loan agreement had they been requested. Because the respondent had actual notice of the interest component of the petitioner’s security, the respondent was not then entitled to rely on s. 29 of the Act and the statutory effect of registration to defeat the petitioner’s prior claim to security for interest payable under the promissory notes (Vancouver City Savings Credit Union v. Alda Wholesale Ltd., 2000 BCSC 411).

Mortgage May Secure Advances Beyond Form B Principal Amount

See the annotation for Forjay Management Ltd. v. 625536 B.C. Ltd., 2020 BCCA 70, leave to appeal refused 2020 CanLII 71311 (SCC) under s. 28 of the Property Law Act in chapter 56 (Property Law Act, R.S.B.C. 1996, c. 377). This was a decision that described Parts 1 and 2 of the Form B approved by the Director of Land Titles in holding, inter alia, that a mortgage may secure advances beyond the amounts of principal set out in clause 5(a) of the Form B mortgage insofar as the advances are made in accordance with the mortgage terms (and may tack in priority where first mortgagees do not receive written notice required by s. 28(2)(b) of the Property Law Act).