Apr 02, 2021
THE NEW REALITY: PRIVATE MORTGAGE DEFAULTS - POWER OF SALE & FORECLOSURE - Part XLIII of a Series – Litigation as a power of sale remedy part 3
Post XLI started an in depth look at power of sale litigation. In this post, I review the requirements of a statement of claim to be issued by a mortgagee intent on exercising its power of sale under a mortgage in default. These requirements are technical, and are set out in the Ontario Rules of Civil Procedure.
But they are also logical requirements. By this I mean only that the mortgagee must ‘tell the judge’ the story (that is, the facts) that shows the judge, in essences, 2 things. First, that the mortgagee has a mortgage that is in default. And second, that the default entitles the mortgagee to the remedy requested (usually, possession of the mortgaged property and judgment on the covenant for the amounts owing under the mortgage). So let’s take a quick look at the story that the mortgagee must tell....
All stories must start at the beginning, and the beginning of the story for the mortgagee is the mortgage loan and mortgage document itself. The statement of claim should therefore start with the fact that the mortgagor borrowed money from the mortgagee and gave to the mortgagee a mortgage of real estate. Next, the mortgagee will want to say that she or he actually advanced money under the mortgage loan to the mortgagor/homeowner.
The statement of claim will follow with a few details of the mortgage; that the mortgagor promised to pay the mortgaged debt together with interest. And that on default, the mortgagee is entitled to possession of the mortgaged property. And most importantly, that the mortgage is in default. Usually, the default will be the failure of the mortgagor to have made a payment due on a certain date. Or, that the mortgage matured and became due and payable in full and the mortgagor did not repay the debt then owing on maturity.
Lastly, the mortgagee will say that the default continues and often detail the amounts owing under the mortgage, either as of the date of the default or at some more recent date after the default. Of course, no statement of claim would be complete without a request for either judgment for possession of the mortgage property or for judgment on the covenant (promise to pay) for the amounts owing under the mortgager – or usually, for both!
Next post will look at additional technicalities of the power of sale litigation. And as always, this blog is intended for information purposes only. It is not legal advice and cannot be relied on as such. Nor is it a substitute for hiring your own legal counsel, who will be an essential member of your mortgage default and power of sale team. And lastly, this blog is just my opinion. I reserve the right to change my mind. And I reserve the right to be wrong.
Be well and stay healthy.