Mortgage enforcement is a form of real estate law that is in place to ensure that the terms of a mortgage contract are upheld. Mortgages have been a staple in contemporary settings, both socially and financially. If it weren’t for mortgage enforcement law, mortgages would become irrelevant as a dominant driving force within our economy.
Mortgage enforcement comes into play when a mortgagor (borrower) fails to comply with agreed-upon terms in a contract with a mortgagee (lender). There are many provisions surrounding enforcement that are in place to ensure that the lender’s rights are protected in the event of a default.
What happens in the event of a default on a mortgage?
Fortunately, defaulting is not a common occurrence on mortgages. The rarity of defaulting is what has built the reputation for mortgages as a strong financial tool. However, defaulting can still happen and when it does there are many other issues that follow.
A default is when the borrower (mortgagor) fails to make a mortgage payment. While this may happen due to a number of reasons, the lender’s rights still need to be protected. They have entered this contract with the knowledge and assurance that their borrower would be paying in full and on time. Because of this, It is important for the lender to know their rights, and what legal action they can take if their default issue is unresolved.
An example of a legal action that can be taken is the issuing of a Notice of Sale. The Notice of Sale, under Ontario’s Mortgages Act, is in place to ensure that the lender has access to a ‘self-help’ option. This act grants the right for the lender to provide the borrower with a 35-day clear out notice with intent to sell the property. This notice can be given if the defaulted payment exceeds a 15-day period.
The Notice of Sale must provide a detailed description of the agreed upon the mortgage, and lay out the amounts that are owed under the mortgage. It also needs to explain that if the amount owed is not paid within the 35-day period, then the lender has full right to sell the property at their discretion.
However, if the Notice of Sale has been unjustly given, or if the borrower deems it invalid then it can be challenged. For this to happen, the borrower needs to seek an injunction from a judge, and further convince the judge that the Notice of Sale is defective. The lender has the right to protect their investment in a property. Ultimately, this just delays time until they can prove that the notice is invalid, or they can pay the full owed amount
Mortgage enforcement protects both parties entered in a mutual mortgage contract. While ensuring that the borrower has the ability to challenge some aspects, it heavily favours the lender in most cases.
Things to keep in mind
As either party in a mortgage agreement, you want to be sure that you know your contract inside and out. This ensures that you are protected, and know what to do if things go poorly in the borrower-lender relationship.
Seeking legal counsel is a valid option before seeking any legal action. Legal advice can help you see your next steps, and understand what needs to be done. While also making sure that you understand your contract and feel confident moving forward. If you are seeking mortgage enforcement action, contact Hummingbird Lawyers today. Our Civil Litigation team can stand with you to make sure that your rights are protected.