Nov 10, 2021
THE NEW REALITY: PRIVATE MORTGAGE DEFAULTS - POWER OF SALE & FORECLOSURE - Part LXII of a Series – Mortgage Statements Part 8
In the previous Post LXI I started to examine how privacy legislation (PIPEDA) affects mortgage statements. In this blog I’ll look at the privacy issues from a prior mortgagee’s view point, especially when the prior mortgagee receives a request for a mortgage statement from a third party who does not have the written consent of the home owner.
This scenario occurs IRL (in real life) when a home owner owes money to an unsecured lender, does not pay the unsecured lender, and the unsecured lender sues and gets a judgment from the courts for the amount of the debt owing. The unsecured lender, now called a judgment creditor, can enforce the judgment by obtaining a writ of seizure and sale from the courts. And the judgment creditor can file the writ in the local Sheriff’s office. A writ of seizure and sale filed in the Sheriff’s office binds the home owner’s (judgment debtor’s) lands and allows the judgment creditor to ask the sheriff to seize and sell the home owner’s lands at any time after the writ has been filed with the Sheriff for at least 6 months.
But the Sheriff will only sell the home if the judgment creditor provides to the Sheriff a mortgage statement from all mortgagees on title to the home owner’s property. And therein lies the rub. Because the mortgagee on title cannot release information to an execution creditor without the consent of the home owner, and the home owner will not likely – if ever – consent.
This catch 22 was the subject of a number of court cases which finally culminated in a case heard by Canada’s Supreme Court found here <https://canlii.ca/t/gvndv>. In this decision [cited as RBC v Trang] the Supreme Court allowed Scotiabank to release a mortgage statement to an execution creditor because the court decided that a home owner implicitly provides her or his consent to the release of this information when the home owner agrees to borrower money from the unsecured lender. In other words, upon taking out an unsecured loan, the home owner knows that if the loan is not repaid when due, the lender will sue the home owner and the lender will need to know how much is owing by the home owner to prior mortgagees in order for the lender to try to force payment of the unsecured loan. Bottom line, there is no breach of the PIPEDA legislation when a mortgagee releases otherwise private information of the kind usually set out in a mortgage statement to an execution creditor.
The next segment will look at discharges and assignments of mortgages. 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 power of sale and mortgage default 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.