TitlePLUS Times
Vol 7. no. 5
December 2004

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Articles

Confirmed Lenders' Update
We are happy to announce that the following lenders have now officially signed Confirmed Lenders Agreements with LAWPRO to accept TitlePLUS policies on a national level:

• Bank of Montreal
• HSBC Bank Canada
• Montreal Trust Company
• Montreal Trust Company of Canada
• National Trustco Inc.
• Scotia Mortgage Corporation
• The Bank of Nova Scotia

Please note that construction loans with the Bank of Montreal are not eligible for TitlePLUS coverage unless you are retained to subsearch title prior to each advance.

In Ontario only, Peterborough Community Credit Union Ltd. and Kawartha Credit Union Limited have become TitlePLUS Confirmed Lenders. Please see the attached pages for details or go to http:// www.titleplus.ca/Lawyers/Confirmed_Lenders.asp to see details on all TitlePLUS Ontario Confirmed Lenders.

Executions may survive Discharge from Bankruptcy and take priority over Mortgage
In Perciasepe v. Smith¹, Perciasepe obtained a judgment against Smith on the basis of fraudulent misrepresentation and other grounds. Smith then made an assignment in bankruptcy, and Perciasepe filed a claim with the trustee. Smith was subsequently discharged from bankruptcy without Perciasepe's debt having been paid. Smith bought a property and mortgaged it to DUCA Financial Services Credit Union Ltd. ("DUCA").

Perciasepe sought an order that his judgment survived Smith's discharge and had priority over DUCA's mortgage. The order was granted. The court held that because Perciasepe's judgment was based on fraud (at least in part), it survived Smith's discharge under Subsection 178(1)(d) of the Bankruptcy and Insolvency Act . The court held that the question of whether a judgment survives a discharge from bankruptcy is to be determined by the court which issued the judgment, not by the trustee in bankruptcy.

It is fairly common to find executions still on file against prospective mortgagors who have been discharged from bankruptcy. This case shows that, when acting for the lender, it is not safe to rely on the fact that the judgment creditor filed a claim in the bankruptcy. The judgment creditor should be contacted, and the execution lifted before closing.

Use Caution when Acting for Non-Institutional Lenders
Sub-rule 2.04(12) of the Law Society of Upper Canada's Rules of Professional Conduct states that a lawyer may represent both a lender and a borrower in a mortgage or loan transaction if:

1. the lawyer practices in a remote location where there are no other lawyers that either party could conveniently retain for the mortgage or loan transaction;
2. the lender is selling real property to the borrower and the mortgage represents part of the purchase price;
3. the lender is a bank, trust company, insurance company, credit union or other finance company that lends money in the ordinary course of its business;
4. the consideration for the mortgage or loan does not exceed $50,000.00; or
5. the lender and borrower are not at "arm's length" as defined in the Income Tax Act (Canada).

Tips for TitlePLUS Users

Definition of "Arm's Length Transaction" for Mandatory Due Diligence
We are often asked what we mean by "arm's length transaction" when we ask you to "Check here if there has been an arm's length transfer of the property in the two years preceding your closing/advance date" in the Mandatory Due Diligence section of the TitlePLUS application.

For your TitlePLUS application, "arm's length" means any transfer other than a transfer:

1. apparently between spouses or family members, as shown on the registered Transfer and/or the attached Land Transfer Tax Affidavit; and
2. for no consideration, nominal consideration ($100.00 or less), or no consideration other than the assumption of an existing mortgage.

TitlePLUS News from LAWPRO

Since users are moving rapidly to the Web, RealtiPLUS Desktop will be discontinued in the first quarter of 2005. If you are currently using RealtiPLUS Desktop, go to www.lawyerdonedeal.com/realestate.asp to sign up for RealtiPLUSWeb or contact LawyerDoneDeal Customer Service at 1-800-363-2253 or TitlePLUS Customer Service at 1-800-410-1013.

The TitlePLUS Team Continues to Grow
We are pleased to welcome the following new employee to the TitlePLUS team:

• Brian Gordon, Customer Service Representative

TitlePLUS Times updates real estate professionals about TitlePLUS developments and related changes in conveyancing. Comments and suggestions are welcome and should be forwarded to:

TitlePLUS
One Dundas Street West
Suite 2200, P.O. Box 75
Toronto, ON M5G 1Z3
Tel: 1-800-410-1013 or (416) 598-5899
Fax: 1-800-286-7639 or (416) 599-8341
E-mail: TitlePLUS@LAWPRO.ca
www.TitlePLUS.ca
titleplus.lawyerdonedeal.com

¹ Eberhardt, J., Ontario Superior Court of Justice, unreported, released October 21, 2003, Court File No. 36585/95

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