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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

Canada

Manitoba

In 1885 Manitoba adopted a modified Torrens system of title registration where the Manitoba government guarantees certification of title in real property. This replaced the previous registry system. Virtually all real property in Manitoba has since been registered under the Torrens system. Mortgages, in the form of a charge or lien on the mortgaged property with the mortgagor remaining the legal owner of the land, and that are in the form prescribed under The Real Property Act (Manitoba), C.C.S.M. c. R30 (the “RPA”) are used almost exclusively to take security in real property. As discussed below, debentures and trust indentures that charge both real and personal property may be approved (“fiated”) by the District Registrar of the Manitoba Property Registry for registration as a mortgage, provided that the instrument meets the criteria of a mortgage under the RPA. In some circumstances notice of a charge in the form of an “equitable mortgage” or a mortgage of a leasehold interest (where no leasehold title has been issued) will be registered by way of caveat in the form prescribed by the RPA.

SECURITY INSTRUMENT USED

Mortgages are registered utilizing the Manitoba electronic mortgage form prescribed by regulation. The Manitoba government certifies that the mortgage or charge is registered as well as its priority on title. This is encompassed in &sect;&nbsp;2(7) of the RPA. Additional terms may be added to the prescribed form. Standard charge mortgage terms may be registered in the Manitoba Property Registry and then incorporated by reference in any mortgage. &nbsp;A debenture or trust deed that charges both real property and personal property may be registered against title to land as a mortgage provided that it is first fiated by a district registrar of a Land Titles Office. In order for a debenture or trust deed to be fiated as a mortgage, it must contain all information required in the statutory form of mortgage and it must been properly executed and witnessed in the manner provided for mortgages.

RECORDING REQUIREMENTS

Electronic registration (eRegistration) of land titles documents began December 17, 2017 and became mandatory under the RPA for law firms and high volume uses on April 3, 2018. On October&nbsp;1, 2018 mandatory use of eRegistration was expanded to individuals and companies that register more than 100 land titles documents annually.

ELECTRONIC FILINGS

STATUTES TO BE WAIVED

The Mortgage Act, C.C.S.M., c. M.200 provides in &sect; 14 that where default has occurred in making any payment due under any mortgage or in the observance of any covenant and, under the terms of the mortgage, by reason of the default, the whole principal and interest has become due and payable, the mortgagor may bring the mortgage back into good standing at any time prior to sale or foreclosure under a mortgage, by performing the covenant or paying the arrears, together with costs. The Mortgage Act also provides in &sect; 15 that where the mortgagor is in default in making any payment of original principal due under any mortgage and the mortgagee has taken sale or foreclosure proceedings, the mortgagor may, at any time prior to sale or foreclosure, pay the full amount of secured by the mortgage, together with costs of proceedings to that date, in full payment of the mortgage. Section 25(6) of The Mortgage Act requires every mortgage to contain the following statement, in bold-face characters or in variant coloured ink: “The Mortgage Act provides that the mortgagor can obtain, free of charge, from the mortgagee a statement of the debts secured by this mortgage once every 12 months, or as needed for payoff or sale”.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

As Manitoba operates under a Torrens system, generally the first mortgage to be registered against title with the applicable Manitoba Property Registry office has priority. Pursuant to &sect;&nbsp;17 of The Mortgage Act, , subject to &sect;&nbsp;31 of The Builders' Liens Act, C.C.S.M., c. B91, any mortgage registered is subject to prior registered interests and has priority over subsequent registered interests. However, if a lender has actual notice of another subsequently registered interest prior to making an advance of funds, the priority of such future advance of funds may be lost. It is therefore not uncommon for first mortgage lenders to require that no subsequent mortgages be granted by the borrower. It is common and prudent practice on the date of any intended advance, that a search of the title is conducted along with a builders' lien search at the applicable Manitoba Property Registry following the close of registrations to determine if a builders' lien has been registered or presented for registration since the date of the first advance under the first registered mortgage. This search will create actual knowledge by the lender of any subsequently registered interests, and in such event, no future advance should be made until all subsequent registered interest holders have provided the lender with an acknowledgment of the lender's priority over the advance. A lender or any other registrant can cede priority of its registration in favor of a mortgage by registering a postponement in prescribed form with the Land Titles Office.

SECURING FUTURE ADVANCES

&nbsp;A mortgagee may pay unpaid real property taxes, insurance, and other amounts required to protect its mortgage security. Such advances to protect collateral will be “tacked” onto the original mortgage and take priority over all interests registered after the mortgage, subject to the comments in the above paragraph Securing Future Advances. If the original mortgage did not set out provisions incorporating additional advances to protect collateral, the interest created by such advances will be subject to all intervening registered interests.

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL INCLUDING PAYMENT OF TAXES AND INSURANCE

Trusts in general and deeds of trust are governed by The Trustee Act, C.C.S.M., c.&nbsp;T.160 (Manitoba). See above regarding registration requirements.

CORPORATE OR INDIVIDUAL

RESIDENCY REQUIRED

Although court foreclosure proceedings are possible, virtually all mortgage sale and foreclosure procedures are advanced through the Manitoba Property Registry under the summary procedure established by the RPA. If the default is something other than in respect of the payment of principal, interest, taxes or insurance premiums, a court order must be obtained before commencing mortgage sale and foreclosure proceedings. A Notice of Exercising Power of Sale (NEPS) may be filed by the mortgagee with the Manitoba Property Registry after the mortgage has been in default for at least 30 days. The NEPS describes the mortgaged land, the current debt secured, the date of default, the date of demand, the nature of the default, and how to bring the mortgage back into good standing. The NEPS is served upon the mortgagor and all other persons having a registered interest in the land subsequent to the mortgagee. If the default is not rectified within 1 month of the NEPS being served, a lender may apply to the &nbsp;District Registrar to sell the land by private sale or by public auction (or both). Where proceeding by public auction, the sale must be advertised in one of the local daily newspapers (i.e. local to the location of the property) at least 14 clear days prior to the date of sale. In some instances, publication in two papers may be required, in which case at least 16 clear days' notice should be provided. A copy of the advertisement and Order for Sale must be sent by mail to the mortgagor and to any other interested parties. The proceeds of mortgage sale are used to pay the debt. The borrower remains responsible for the payment of any deficiency. The debt owing will include all reasonable costs undertaken by the lender in pursuing the foreclosure process, including legal fees, but recoverable costs will be limited to &nbsp;the fixed tariff of fees under RPA. The &nbsp;District Registrar has authority to review and tax the costs claimed by the mortgage lender and to make any adjustments deemed reasonable. Only after the property is unsold after a private sale or auction is a mortgage lender entitled to apply to the District Registrar for a final order of foreclosure. The final order of foreclosure vests title to the mortgaged land in the mortgagee and has the effect of extinguishing the debt owed under the mortgage.

BRIEF DESCRIPTION OF PROCEDURE

The typical length can vary considerably, depending on the time required for personal or substitutional service, and Manitoba Property Registry processing delays. The mortgagee can start the foreclosure process 1 month after the mortgager has been in default by filing a NEPS. The mortgagee cannot apply for foreclosure until 6 months of default Farm debt moratorium laws (The Family Farm Protection Act C.C.S.M. c. F15 (Manitoba) and The Farm Debt Mediation Act S.C. 1997, c. 21 (Canada) provide for special leave and mediation processes which can significantly extend the time required for mortgage realization on farm land.

TYPICAL LENGTH OF PROCEDURE

For an auction sale, the mortgagee must advertise the auction in a local newspaper and send notice by mail to all parties served with the NEPS at least 14 days before the auction. The mortgagor must establish the reserve bid, which cannot exceed the amount of money secured under the mortgage plus the costs of the sale. There is provision to set the reserve bid at a lesser amount (often tied to the fair market value), provided that the reserve bid is reasonable in the circumstances. The mortgagee must serve by mail a Notice of Intention to Sell by Private Contract on all parties served with the NEPS. The listing agreement and any offer to purchase the property must contain provisions making any sale subject to approval of the District Registrar of the Land Titles Office. Applications for approval of a private sale must be supported by 1 appraisal and 1 opinion of value of the property, each of which must be dated or updated within 2 months of any agreement for sale. To secure approval, the purchase price generally must be not less than 90 percent of the lowest of the two estimates of value.

FORECLOSURE BID REQUIREMENTS

Redemption is available up to the moment that the property is sold through private sale or public auction. Pursuant to &sect;&nbsp;138(5) of the RPA, the Registrar may extend the time for redemption if a person with an interest in the land submits an application and proves sufficient cause. See above regarding the effect of &sect; 14 of The Mortgage Act on the ability of a mortgagor to bring a mortgage back into good standing upon payment of arrears, the remedying of any default, and the payment of costs.

REDEMPTION PERIOD AND PRICE

There is no redemption period after the point when property rights are terminated either by sale or foreclosure of the property.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

A final order of foreclosure extinguishes the debt owing under the mortgage, a mortgagee pursuant to &sect;&nbsp;16 of The Mortgage Act. Additionally, claims for deficiency cannot be commenced based on a collateral security: Manitoba Dev. Corp. v. Berkowitz (1979), 101&nbsp;D.L.R. 3d 421 (Can. Man. C.A.). Where mortgage security is realized upon by private sale, the ability to claim against the mortgagor for any deficiency is preserved.

DEFICIENCIES

Following Torrens principles, foreclosure will not affect a lease notice of which was registered by caveat prior to the mortgage. By virtue of the statutory exception to title contained in &sect;&nbsp;58(1) of the RPA, unregistered leases for a term of less than 3 years will also have priority over a mortgage and survive foreclosure or sale, provided that the tenant is in actual possession of the leased premises. Any lease notice of which is registered prior to the registration of the mortgage survives mortgage sale or foreclosure. Any lease notice of which is registered after the registration of the mortgage may be affected by mortgage sale or foreclosure. Rules under The Residential Tenancies Act, C.C.S.M., c. R.119 (Manitoba), and The Landlord and Tenant Act, C.C.S.M., c.&nbsp;L.70 (Manitoba), govern the legal removal of residential tenants. It is common practice for commercial tenants to require landlords to obtain non-disturbance agreements from mortgagees in order to preserve the tenant's rights in the event of mortgage realization. In some circumstances, mortgagees may wish key tenancies to have priority of registration over the mortgage in order to prevent termination of the leases by operation of law in a mortgage realization.

EFFECT OF FORECLOSURE UPON LEASES

On November 9, 2016, the Registrar-General issued a direction to all clients of the Manitoba Land Titles System limiting access to copies of the following registered documents or a status of instrument for such registered documents: <ul>
 <li>Notice of Exercising Power of Sale;</li>
 <li>Application for Order for Sale;</li>
 <li>Tax Sale First Return;</li>
 <li>Tax Sale Second Return;</li>
 <li>Tax Sale Notice;</li>
 <li>Tax Application.</li>
</ul> A District Registrar is authorized to provide a copy of one of these documents or a status of instrument regarding the document to a person who meets the following criteria: <ul>
 <li>is registered owner of the land the document is registered against or one of their officers or employees on their behalf if the registered owner that is not a natural person;</li>
 <li>is the registrant of the document or one of their officers or employees on their behalf;</li>
 <li>is doing so as the attorney under a power of attorney or as personal representative of a person (executor, administrator, substitute decision maker, committee) who meets one of the criteria for requesting the document under clause (a) or (b);</li>
 <li>is a practising lawyer or one of their employees on their behalf and the lawyer represents:</li>
 <li>a registered owner of the land subject to the document;</li>
 <li>the registrant of the document; or</li>
 <li>a financial institution as defined in subsection 72(2) of the RPA;</li>
 <li>has the written permission of the registered owner of the land the documents is registered against;</li>
 <li>is authorized or otherwise entitled pursuant to an order of a court to have a copy of the document;</li>
 <li>is doing so on behalf of the Crown or with respect to carrying out duties or functions on behalf of the Crown;</li>
 <li>is a peace officer carrying out duties as a peace officer;</li>
 <li>is doing so on behalf of a regulatory agency and is doing so for the purposes of an investigation made pursuant to that agency's mandate;</li>
 <li>is an employee or officer of a financial institution as defined in subsection 72(2) of the RPA and is doing so as part of the financial institution's business; or</li>
 <li>has been authorized by the Registrar-General.</li>
</ul>

RESTRICTION ON ACCESS TO MORTGAGE SALE AND TAX SALE DOCUMENTS

Pursuant to &sect;&nbsp;2 of the federal Interest Act, R.S.C. 1985, c. I-15 (Canada), parties may stipulate for and contract to any rate of interest or discount that is agreed to, provided that the rate does not contradict any other Act of Parliament. &sect;&nbsp;347 of the Criminal Code of Canada, R.S.C.&nbsp;1985, c. C-46, states that it is a criminal offence to charge interest in excess of 60% per annum. Additionally, pursuant to The Unconscionable Transactions Relief Act, C.C.S.M., c. U.20 (Manitoba), a lender is not allowed to charge a rate of interest that is excessive or harsh and unconscionable. The Interest Act also stipulates, under &sect;&nbsp;6, that no interest shall be chargeable to the mortgager unless the mortgage explicitly discloses the amount of the principal and the rate of interest to be charged. &sect;&nbsp;3 of the Act states that where no interest rate is defined in the agreement, the rate will be deemed to be 5% per annum.

USURY CEILING

USURY EXEMPTIONS

A financing statement must be registered with the Property Registry. Pursuant to &sect;&nbsp;25 of The Personal Property Security Act, C.C.S.M., c. P.35 (Manitoba) (the “PPSA”), such registration will perfect a security interest in collateral that is personal property, subject to the additional land title filing requirements for security interests taken in fixtures, rents and growing crops.

LOCATIONS FOR FILING

To perfect a security interest in fixtures, rents and growing crops, a financing statement must be filed in the Property Registry, and the details of this registration must be registered in the Manitoba Property Registry on title to the land by way of a Personal Property Notice, in prescribed form.

SECURITY INSTRUMENT AS FIXTURE FILING

The limitation period for recovery of money charged on land is now 2 years Pursuant to The Limitations C.C.S.M. c. L150.

STATUTE OF LIMITATIONS PERIOD

Where any registered mortgage has been satisfied, such mortgage may be discharged by use of the Manitoba Land Titles “Discharge Form 7”. Pursuant to the regulations under the RPA, a discharge must be provided by the mortgagee within 60 days of payment in full, and the fee for the discharge may not exceed the prescribed maximum (currently $100).

REQUIREMENTS FOR RELEASE OF MORTGAGE

The Homesteads Act, C.C.S.M., c. H.80 (Manitoba), gives special protections to the family home (or homestead portion of farm property) for spouses or common-law partners who are not registered on the certificate of title. &sect;&nbsp;4 of The Homesteads Act prohibits an individual from selling or mortgaging a homestead without the written consent of their non-owning spouse or common-law partner. Pursuant to &sect;&nbsp;21(1), a spouse or common-law partner with homestead rights is entitled to a life estate in the homestead upon the death of the registered owner.

HOMESTEAD ISSUES

A family asset is any asset that either or both spouses have acquired while married or living together, or that either or both common-law partners have acquired while cohabitating. This includes a family home. Pursuant to The Family Property Act, C.C.S.M., c. F.25 (Manitoba), both spouses or common-law partners have a right to an equal share in the value of the family property upon separation.

COMMUNITY PROPERTY

There is a registration fee to register a mortgage in the Manitoba Property Registry. At the time of writing it is $124.

MORTGAGE REGISTRATION FEE

No land transfer tax is payable in relation to the registration of a mortgage. A provincial land transfer tax is generally exigible when a transfer of land is registered at the Land Titles Office. The tax is collected by the Manitoba Property Registry on a sliding scale calculated and based on the fair market value of the land transferred. Land transfer tax is governed by The Tax Administration and Miscellaneous Taxes Act, C.C.S.M., c. T.2 (Manitoba). Not all transfers are subject to a land transfer tax. Pursuant to &sect;&sect;&nbsp;113(1), 113(2), and 113(3) of The Tax Administration and Miscellaneous Taxes Act, exemptions exist for farmers, veterans, charities, corporations upon dissolution or winding up, and First Nations bands as defined under the federal Indian Act.

TRANSFER TAX

The practice in the Province of Manitoba is in the appropriate situation to seek the appointment of a receiver pursuant to the federal Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (Can.). However, pursuant to &sect;&nbsp;89 of the RPA, a district registrar will not accept a registration or a transfer of mortgage or any dealing therewith executed by a receiver unless the appointment of the receiver has first been approved by the court.

RECEIVERSHIP

All mortgage brokers must be registered under The Mortgage Brokers Act, C.C.S.M., c. M.210 (Manitoba). The Mortgage Brokers Act is administered by the Manitoba Securities Commission and the provincial Registrar has the power to grant or deny applications for registration. Pursuant to &sect;&nbsp;3(1) of The Mortgage Brokers Act, corporations operating as an insurer in accordance with the Insurance Act, C.C.S.M., c. I.40 (Can.), banks, trust or loan companies, credit unions, crown corporations, persons registered under the Securities Act, C.C.S.M., c. S.50 (Manitoba), and persons exempted under the regulations are exempt from the registration requirement.

LENDER QUALIFICATIONS AND/OR LICENSING

A registered mortgage in Manitoba may only be modified by agreement between the mortgagor and the mortgagee. Any amendment to a registered mortgage must be filed using the prescribed Manitoba Property Registry “Amending Agreement” form prescribed under the RPA, and the consent of all subsequent registered encumbrancers will be required on such Form.

MODIFICATION

<ol start="300">
 <li> INCEPTION OF L&M LIEN: The Builders' Liens Act, C.C.S.M., c. B.91 (Manitoba), allows any person who does any work, provides any services or supplies any materials to be used in performance of a contract or sub-contract for any owner, contractor or sub-contractor, to register a lien for the value of the work, services or materials against the title to the land as a claim to payment for work done or services or materials supplied. Builders' liens must be registered with the Manitoba Property Registry and no lien exists for a claim of less than $300. Pursuant to &sect;&nbsp;15 of the Builders' Liens Act, the lien commences against owners, charges or mortgagees under or through instruments, registered or unregistered, upon registration and takes effect from the date of the commencement of work or services or from the date that materials were first supplied.</li>
 <li> PRIORITY OF BUILDERS' LIEN: &sect;&nbsp;31 of the Builders' Lien Act states that a builders' lien has priority over all judgments, executions, assignments, attachments, garnishments and receiving orders registered after the lien arises. The lien also has priority over all mortgage advances made after the registration of a claim for the lien.</li>
</ol>

LABOUR AND MATERIAL (L&M) LIEN CLAIMS - PRIORITY ISSUES

<ol>
 <li>FORM USUALLY REQUIRED BY LENDER: Manitoba is serviced by several competing title insurers which are subsidiaries of US insurers. There is no standardization in Canada equivalent to the U.S. ALTA standard. That said, the policy language and available endorsements are similar among all insurers. Additional premiums are required by some title insurers for certain endorsements, such as zoning and creditor's rights endorsements. Title insurers are amenable to developing programs tailored to the needs of clients with a large volume of transactions, including setting standard endorsements and volume discount fees.</li>
 <li>ENDORSEMENTS AVAILABLE: Standard coverage is set out in the form of “policy jacket” to which additional endorsements are added. There is broad flexibility in the available endorsements (as many as 50 different endorsements have been identified). Some endorsements may require payment of additional premiums, and some may have coverage limits. Specialty endorsements are available for particular projects (such as wind farms and solar energy farms).</li>
</ol> Standard policy terms and available endorsements for lenders' policies include: <ul>
 <li>access;</li>
 <li>address;</li>
 <li>future advances (for construction mortgages);</li>
 <li>gap coverage for registration processing delays;</li>
 <li>assignment of rents;</li>
 <li>commercial lender group (continued coverage when there are changes to parties in syndicated loans);</li>
 <li>condominium (liens and assessments);</li>
 <li>contiguity;</li>
 <li>environmental liens;</li>
 <li>errors in government search responses;</li>
 <li>utility service;</li>
 <li>work orders; and</li>
 <li></li>
</ul> &nbsp;

Manitoba

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Manitoba

Manitoba

Mortgage Law Summary

Continue reading theMortgage Law Summary for Manitoba

Continue reading the
Mortgage Law Summary for Manitoba