When a mortgage is registered against a property by a lender, it is known as a Charge. The lender is the Chargee and the borrower is the Chargor. The Chargee will provide the Chargor what is commonly known as a set of Standard Charge Terms (“SCT”). SCT are filed with municipal Land Registrars pursuant to the Ontario Land Registration Reform Act, R.S.O. 1990, and are by reference incorporated into the registered Charge.
The Standard Charge Terms is a legal document that must be signed and provided to both the borrower and the lender. The Standard Charge Mortgage Terms are all the terms and conditions regarding borrowing and repaying money when real property is used as collateral. The terms provide definitions for the legal and banking terms and clarify what the borrower and lender promise to do under this agreement.
The following conditions are some of the provisions generally incorporated in a Standard Charge Mortgage Terms:
- Type of mortgage on the property and the interest rate
- Mortgage repayment conditions and the consequences of failure to perform the obligations.
- Conditions with regards to any change affecting the mortgage including sale or transfer of the property, commencing a construction or even changing the use of the property
- Conditions on renewal and amendments to the mortgage
- Insurance for any outstanding debt remaining on the mortgage
Legal obligations of borrower including paying all interest and principal as it becomes due; paying interest on any amounts in default and until the Chargee disposes of the property; making all payments auxiliary to the property such as realty taxes, insurance, utilities, maintenance, etc.; keeping the land and structures in a good state of repair; allowing the lender to peacefully distrain and have quiet possession of the lands and structures in the event of payment default that gives rise to the lender’s power of sale.
Many clients are handed the SCT and sign an acknowledgment that they have received in their possession the document; however most do not read them. Defaulting on mortgage payments or acting contrary to the terms laid out in the SCT can have serious consequences for Chargors and therefore it is in any borrower’s interest to obtain a copy well before they commit to the financing provided by their lender.
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