The Chambre des notaires du Québec has put a new rule into place in regarding discharging your mortgage.

The purpose of these new rules is to make real estate transactions more secure for the seller, the buyer, the old and the new mortgage creditors, and the notary.

Today people have access to different types of credit that can be secured by a mortgage. Faced with this diversity, mortgage lenders will only discharge the mortgage on the immovable once the seller has satisfied all loans and other forms of credit granted and secured by the immovable in question.
For example
An owner has an immovable worth $210,000 which he acquired using a $190,000 loan secured by a mortgage. When the

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owner got his mortgage, the lender offered him a $10,000 line of credit and a credit card with a $5,000 limit, also secured by mortgage. The total amount secured by immovable mortgage is $205,000.

The notary will now have to obtain a certified statement of account from the mortgage lender in order to discharge the mortgage. To do so, all the debts secured by the immovable must be repaid. It is easy to see the difficulties that can be created if the sale of the immovable does not cover all the sums due under the various types of credit.

The new rules imply that unless this certified account statement is received showing that all sums due have been repaid and including a firm commitment to sign the discharge of the mortgage within forty-five (45) days following repayment of the sums indicated on the statement, the notary will automatically withhold the funds until the discharge of the guarantee(s) is published. In concrete terms, this means that the transaction cannot be concluded until all sums owing have been repaid.

Duties of the agent
The ACAIQ therefore recommends that real estate agents ask their vendor to obtain an up-to-date account statement from their mortgage lender as soon as the brokerage contract is signed. This statement should contain the detail of all the products covered by the mortgage guarantee.

The real estate agent must explain to the vendor the problems they will face if his mortgage was used to secure several types of credit, and the choice they must make when selling the immovable.

72-hour clause
In the case of a promise to purchase that is conditional to the sale of the buyer’s home and once the 72-hour notice is set in motion, the proof of financing provided by the first buyer will have to include that the mortgage lender will discharge the mortgage and all loans linked to the mortgage guarantee.


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