231 Effect Of A Mortgage

PRACTICE

Effect of Mortgage

The Form B Mortgage form operates to charge the mortgaged land whether or not it contains express words of transfer and redemption. For this reason, the registrar no longer needs to determine the nature of the interest by passing on the traditional words of grant and mortgage. Section 231 of the Act ensures that every mortgage in the form approved by the director that is completed and executed in accordance with the director’s directions for electronic land title forms charges the interest mortgaged.

Words of Grant

Pursuant to s. 231(3)(c) of the Act, words of grant may be included in a set of filed standard mortgage terms or express mortgage terms. Words of grant must not be included on the Form B Mortgage form, including words of grant for an Assignment of Rents charge. An Assignment of Rents charge is applied for on the Form B Mortgage form by referring to the page and paragraph number in the filed standard mortgage terms or express mortgage terms that contain the words of grant for the Assignment of Rents charge. Where the Form B Mortgage denotes the mortgage terms consist of Prescribed Standard Mortgage Terms, a page of paragraph cannot be referenced for the grant of an Assignment of Rents charge, as the Prescribed Standard Mortgage Terms do not include a grant of Assignment of Rents.

Mortgage by One Joint Tenant

Registrar Requires Severance

Where one joint tenant gives a mortgage, the registrar requires a severance of the joint tenancy as a condition of registration of the mortgage. Mortgagors can achieve severance by transferring their interests to themselves. Registration of the transfer must precede registration of the mortgage. See s. 18(1) and (3) of the Property Law Act regarding these transfers.

Difficulty Determining State of Title

Where one joint tenant has mortgaged their interest, severance is required because the registrar cannot conclusively determine:

1. the state of the mortgagor’s title; or
2. on the event of the mortgagor’s death, whether or not the mortgagor’s interest passes to the surviving joint tenant or to the personal representative of the mortgagor.

In addition, there may be some doubt as to the state of the mortgagee’s title if the registration of the mortgage is found not to operate as a severance. In these cases, the mortgagee’s interest may cease to exist on the death of the mortgagor.

Endorsement on Title

On severance, the registrar enters the following notation in the legal notation segment of the original title held in joint tenancy:

JOINT TENANCY SEVERED, SEE (doc#)

CASE LAW

Effect of Mortgage

Notes on Case Law: The effect of s. 231 should be assessed in light of a long line of case law establishing that a grant of mortgage vests the legal estate in the mortgagee (North Vancouver v. Carlisle, [1922] 3 W.W.R. 811 (B.C.C.A.)).

Mortgage of Defeasible Fee Simple

When a mortgage is registered, it attaches to and affects the title or interest of the mortgagor. Where the mortgagor’s title is subject to a registered possibility of reverter, the mortgage attaches to a defeasible fee simple, because that is all that the mortgagor has; if the fee reverts, the mortgagor is left with nothing and there is nothing to which the mortgage can attach. An agreement postponing the possibility of reverter to a mortgage cannot be used to effectively expand the estate that it charges (that is, to convert the estate from a determinable fee simple into an absolute fee simple). If a mortgagee wishes to have a charge against the possibility of reverter as well as the determinable fee simple, then it should do so by taking a mortgage of both the determinable fee simple and the possibility of reverter and registering that mortgage as a charge against both (Westsea Construction Ltd. v. British Columbia (Registrar, Land Title Office), 1995 CanLII 1087 (BC SC); see also the annotations for this decision under s. 1 of this Act and ss. 8 and 10 of the Property Law Act).