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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

Nova Scotia

Mortgages and deeds of trust are both recognized. Deeds of trust are mainly used by corporations.

SECURITY INSTRUMENTS USED

The Land Registration Act, S.N.S. 2001, c. 6 (Can.). (“LRA”) governs the recording of mortgages in the Province of Nova Scotia. It provides for the registration of title to land as well as instruments related thereto. Security interests do not transfer the title of the land charged by them and do not sever a joint tenancy. A security interest is an interest in land and has effect as security and is recognized under law only to the extent of the actual obligation of the mortgagor under law. Except as and against the person making the instrument, no instrument until recorded passes an interest nor renders it liable as security for the payment of money. In 2001, c.6, s.45. To be valid, the instrument being registered must include: the parcel identification number; civic address; lot number; general location of parcel; description of parcel; indirect or direct access to parcel; name and mailing address of the owner in fee simple; instrument most recently conveying fee simple; non-residential owners; full text of all recorded interests; names and mailing addresses of holders of recorded interests; full text of servitude benefiting or encumbering the parcel, and shall be accompanied by a certificate of legal effect signed by an authorized lawyer duly licensed to practice real estate law in the Province of Nova Scotia certifying the legal effect of the document. Where any person applies to have an interest registered pursuant to the LRA or to have a registration revised to show a new or additional owner, that person shall include in the application a statement as to whether any of the owners of the interest is a non-resident. 2001,&nbsp;c.&nbsp;6, &sect;&nbsp;38.

RECORDING REQUIREMENTS

STATUTES TO BE WAIVED

UNUSUAL TREATMENT OF STANDARD PROVISIONS

A mortgage has priority over subsequent recorded instruments to the extent of the obligations secured and the sums actually advanced under the mortgage provided the advances do not exceed the amount for which the mortgage is expressed to be a security and even though part of the sums may have been advanced after the recording of a subsequent interest. LRA &sect;&nbsp;52(2). This applies to running, current, or revolving accounts, as well as lines of credit, even though some or all of the sums advanced under it have been repaid. LRA &sect;&nbsp;52(2A). Exceptions to this are when a lien pursuant to the Builders' Lien Act, R.S.N.S. 1989, c. 277 (Can.). (“BLA”) and/or the Maintenance Enforcement Act S.N.S. 1994-95, c. 6 (Can.) is recorded. LRA &sect;&sect;&nbsp;52(2B)(a), 52(2B)(b). As well, subsequent mortgages registered must provide actual notice to those in priority to them. Without actual notice, a prior mortgage may claim priority up to the face amount of the mortgage for moneys advanced under the prior mortgage, subsequent to the registration and advancement under the subsequent mortgage. LRA &sect;&sect;&nbsp;52(2B)(c).

SECURING FUTURE ADVANCES

In accordance with the Nova Scotia Civil Procedure Rules, Royal Gaz., November 19, 2008, &sect;&nbsp;72.02. (“NS Rules”), lenders under a secured mortgage loan have a valid claim to be reimbursed for reasonable costs, charges, and expenses properly incurred with respect to the enforcement of its mortgage security, provided such written provisions for reimbursement are contained in the mortgage instrument and written receipts are provided to the Court.

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

Assignment of rent is governed by the LRA and the Personal Property Security Act, S.N.S. 1995-96, c. 1 (“PPSA”), with respect to proceeds. A lease constitutes an interest in real property, so a mortgagee may register a collateral security interest against the rental income being earned by the mortgagor under the terms of the lease. The mortgagee, by virtue of its assignment of rent collateral security, is thus entitled to the rental income in the event of a default.

ASSIGNMENT OF RENT

CORPORATE OR INDIVIDUAL

RESIDENCY REQUIRED

When a mortgagor defaults on the mortgage the mortgagee normally will send a demand letter before seeking legal redress. If the mortgagor does not comply with the demand letter, the mortgagee will commence legal proceedings pursuant to the NS Rules. The mortgagor will be served in person with a Notice of Action & Statement of Claims, stating that the foreclosure process has been commenced. The mortgagor will then file a defense or apply to the court for relief within 15 business days if served within the Province of Nova Scotia. If no defense is filed, the mortgagee can make a motion for an order of foreclosure, sale and possession of the property. This is usually ex parte. Whether defended or not, the judge can: ask the mortgagee to provide information and proof as to the mortgage debt; order that the mortgagor be present before hearing the case; or make an order for foreclosure and sale. NS Rules &sect;&nbsp;72.07. If a mortgagee is successful, a Sheriff's sale is conducted by public auction, unless a person has made a satisfactory private offer to the lender and several other conditions have been met. NS&nbsp;Rules &sect;&nbsp;72.08. A Sheriff or other person appointed by the court may sell the property by auction. The mortgagee's lawyer must advertise the sale of the property in a local newspaper in the area where the property is located. There must be at least 2 advertisements in a local newspaper, the first at least 15 days before the sale and the second, within 7 days of the sale. Notice must be given to the mortgagor at least 15 days before the sale containing the time and place of the auction. Once the property is sold, and the amount due is paid to the mortgagee, the Sheriff files a report with the court. Once the report is filed, the mortgagee applies for an order confirming sale. This document states the sale price and that foreclosure is now complete. The mortgagee must also file the Sheriff's report and an affidavit by the mortgagee's lawyer stating that all foreclosure requirements have been satisfied.

BRIEF DESCRIPTION OF PROCEDURE

If no defense is filed, the process usually will take 2 to 3 months.

TYPICAL LENGTH OF PROCEDURE

Attendance at the auction by the bidder or an agent of the bidder is required. The successful bidder will have to pay 10% of the sale price at the end of the auction and then has 15 days to pay the balance. If the balance is not paid the 10% deposit is forfeited and applied to the amount owed to the mortgagee.

FORECLOSURE BID REQUIREMENTS

The mortgagor can redeem the property at any time up to the time of the order confirming the sale. The mortgagor must pay the principal, interest and costs associated with the foreclosure process. NS Rules &sect;&nbsp;72.16.

REDEMPTION PERIOD AND PRICE

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

If the proceeds of sale are insufficient to compensate the mortgagee a deficiency judgment may be ordered. If so ordered, the mortgagor is obligated to pay the amount owing on the mortgage plus interests, costs, out-of-pocket expenses, Sheriff fees, and property taxes, less the amount received from the sale in the foreclosure process. NS Rules &sect;&nbsp;72.13.

DEFICIENCIES

A residential tenant after a sale must be given notice in accordance with the Residential Tenancies Act, R.S.N.S. 1989, c. 401 (Can.), which requires the earlier of 3 months of the lease's expiry under any type of lease arrangement. Commercial tenants must vacate on the foreclosure sale day unless an agreement is reached with the new owner.

EFFECT OF FORECLOSURE UPON LEASES

The Criminal Code, R.S.C. 1985, c. C-46, &sect;&nbsp;347 (Can.) makes it an offence to charge an annual rate of interest that exceeds 60% on the credit advanced under an agreement. The Interest Act, R.S.C. 1985 c I-15 &sect;&nbsp;6 (Can.). (“IA”) requires that the mortgage instrument state the amount of the principal advanced and the rate of interest chargeable on the principal calculated yearly or half-yearly, not in advance.

USURY CEILING

USURY EXEMPTIONS

Federal legislation provides for statutory prepayment rights to residential mortgagors. A mortgagor can prepay a closed mortgage loan with a term exceeding 5 years at any time after the first 5 years of the term. Payment of a penalty equal to 3 months' interest applies. This is in lieu of providing notice. IA &sect;&nbsp;10(1). Corporations, joint-stock companies, partnerships, trusts settled for business or commercial purposes, and unlimited liability corporations are excluded from the statutory prepayment right. IA&nbsp;&sect;&nbsp;10(2)(a).

PREPAYMENT PREMIUMS AND SIMILAR AMOUNTS

A guarantor is known in equity as a surety. A surety has rights that can be exercised against the creditor of the principal debtor whose debt the surety has guaranteed. One of those rights is the right of subrogation, which is the right, upon payment of the debt by the surety, to stand in the place of the creditor and have the benefit of all of the creditor's rights Standard Brands Ltd. et al v. Fox et al., (1972)&nbsp;29 D.L.R. (3d) 167 (N.S.A.D.). Applying this to mortgages, upon payment by the guarantor of the mortgage debt, the guarantor is entitled to the benefit of all the rights of the mortgagee, including the right to the mortgage. The guarantor is entitled to an immediate assignment of the mortgage and the right to have foreclosure in its own name. Judicature Act, R.S.N.S. 1989, c. 240, &sect;&nbsp;43(7) (Can.).

GUARANTY, ASSUMPTION PAYMENT, OR OTHER AGREEMENT

FOR FILING: Filings pursuant to the PPSA are to be made in the Personal Property Registry of Nova Scotia, an electronic central registry that serves the entire Province. This registry allows both individuals and organizations to record security interests in personal property, which includes goods, a document of title, chattel paper, investment property, an instrument, money, or an intangible. PPSA &sect;&nbsp;2(1)(ad). A lien charge or other interest that is given by rule of law cannot be filed in the Personal Property Registry unless a statute specifically allows it. PPSA &sect;&nbsp;5(a).

LOCATIONS

Yes. A security interest in a fixture and a security interest in a crop may be registered in a registry of deeds by submitting a notice in accordance with the regulations of that registry. PPSA &sect;&nbsp;50(2). Once registered, every person dealing with the land is deemed to have knowledge of the security interest. PPSA &sect;&nbsp;50(4). The security interest in the goods attaches before or when the goods become fixtures and has priority, with respect to the goods, over a claim to the goods made by someone with an interest in the land, PPSA &sect;&nbsp;37(2), but is subordinate to the interest of a person with a registered mortgage of the land if, after the goods become fixtures, that person makes an advance under the mortgage or obtains an order for foreclosure or sale before the security interest is registered. PPSA&nbsp;&sect;&sect;&nbsp;37(4)(a), (b).

SECURITY INSTRUMENTS AS FIXTURE FILING

Any person or entity entitled to or claiming under a mortgage of land may bring an action for recovery of the land within 20 years from the last payment of any part of the principal money or interest secured by the mortgage. Limitations of Actions Act, R.S.N.S. 1989, c. 258, &sect;&nbsp;24(1) (Can.). (“LAA”). After 20 years has elapsed, no action to recover the land can be brought. The timing of the 20-year period is based on the maturity date set out in the mortgage or any registered or recorded renewal of the mortgage. LAA&nbsp;&sect;&nbsp;24(2). The same 20-year period applies to the enforcement of claims under the PPSA commencing when the right arises LAA &sect;&nbsp;24A. As well, the 20-year limitation period also applies to rent, commencing from the last time at which any such rent was received. LAA &sect;&nbsp;11(a).

STATUTE OF LIMITATIONS PERIOD

A lien is discharged when the claimant authorizes in writing the acknowledgment of payment, verified by affidavit and registered. BLA&nbsp;&sect;&nbsp;29(1). The same fee that is applicable to the claim is also applicable to the discharge of the lien. BLA &sect;&nbsp;29(3). Any lien for which a claim has been registered absolutely expires once 105 days have passed since the work or materials have been provided. BLA &sect;&nbsp;26(1). However, a Certificate of Pending Litigation, issued by the Clerk of the Court upon a claimant's lawyer initiating a formal legal action to enforce the lien, may be discharged and released only upon the registration of a court order or a certificate of the court clerk certifying such release and discharge.

REQUIREMENTS FOR RELEASE OF LIEN

HOMESTEAD ISSUES

Regardless of which spouse owns the property, both spouses are equally entitled to possession of the matrimonial home. Matrimonial Property Act, R.S.N.S. 1989, c.&nbsp;275 &sect;&nbsp;6 (Can.). (“MPA”). Both spouses' consent is required to dispose of any interest in the matrimonial home. MPA &sect;&nbsp;8. The right to redeem and the notice of proceeding to realize security of matrimonial home are also held by both spouses. MPA &sect;&nbsp;9. When the marriage has terminated, a spouse can apply for the division of matrimonial assets. It is assumed that this division will be equal unless it is proved otherwise. The division of assets and the ownership of real property are governed by the law of the last common residence. If both spouses resided in Ontario, but are divorced pursuant to Nova Scotia law, the division of assets will be regulated by Ontario law. MPA &sect;&nbsp;22. Domestic partners have the same rights and obligations as those married. Vital Statistics Act, R.S.N.S. 1989, c. 494, &sect;&nbsp;54(1)(g) (Can.). (“VSA”). The parties must make a domestic partnership declaration and need not be of the opposite sex. VSA &sect;&nbsp;53(2)(ha). Spouses can agree on how to divide the property and debt via a prenuptial agreement, a marriage contract, or a separation agreement. If an agreement cannot be reached, the MPA governs and a judge will make the determination of what is equitable. Business assets usually are not considered matrimonial unless they are in the name of both spouses. A spouse may be entitled to business assets if the spouse contributed to the building or maintenance of the business. This usually is evidenced by assisting in the business while earning a nominal or no salary.

COMMUNITY PROPERTY

MORTGAGE TAX

The fee for registering or recording a document is $100.

DOCUMENTARY STAMP TAX

A real estate conveyance tax is potentially applicable to every deed conveying real property situated within the Province of Nova Scotia. The tax is imposed by a municipality on the value of the real property conveyed or transferred by deed. The enabling legislation is the Municipal Government Act, S.N.S., 1998, c.8-Part V(Can.). The deed transfer tax rates vary from municipality to municipality and range from 0% to 1.50% of the purchase price. A lease for a term longer than 21 years is subject to deed transfer tax, which is prorated if the real property is situated partly within and partly outside an area in which a transfer tax applies. The tax is payable at the time of the transfer. Coincident with the submission of the deed or transfer for registration, the grantee, or their solicitor or agent, must submit an Affidavit of Value setting forth the “sale price” or “value” (both terms defined) of the property. Before this transfer can be recorded, a certificate by the collector of the tax must be issued stating that the tax has been paid or that no tax was applicable. Even in those municipalities where there is no deed transfer tax levied, the Affidavit of Value must be completed and submitted with the transfer. If the applicable transfer tax is not paid it constitutes a lien on the property, which would include an additional penalty and interest. The lien attaches when the tax is due and continues until discharged by payment. Additionally, a tax may be levied when a deed conveys a residential property (term defined) situated within the Province of Nova Scotia to a non-resident of Nova Scotia. The tax is 5% of the greater of the sale price or the assessed value of the residential property, multiplied by the non-residents ownership interest in the property expressed as a percentage. The enabling legislation is the Non-resident Deed Transfer Tax Act, S.N.S., 2022, c.4, as amended by 2023, c.2, ss.17-26. The tax must be paid before the deed is registered; if the tax is unpaid, similarly, the Province may register a lien on the property, or any other real property owned by the person in the Province. As a general rule no tax is payable in respect to deeds that confirm, correct, modify, or supplement a deed previously given, as there is no consideration paid or payable. Finally, no tax is payable on transfer of property between spouses or transfers by way of gift.

TRANSFER TAX

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS

In accordance to the NS Rules, a court-appointed receiver is available upon application to the court, pursuant a judicial determination that it is appropriate in the circumstances that the appointment of a receiver should take place.

RECEIVER AVAILABLE

Certain lenders are required to be licensed under the Mortgage Brokers and Lenders Registration Act, which was introduced in Nova Scotia in 1966. In most out-of-province commercial mortgage loans, if the lender is not registered, it must engage the services of a licensed Province of Nova Scotia mortgage broker to act as its agent in arranging and funding the commercial loan. There are general rules pertaining to the form of loan application as well as special rules regulating the amount of the loan and/or commitment fees that can be charged in any given transaction.

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

&sect;&nbsp;90 (e) and (f) of the Nova Scotia Environment Act, 199495, c.&nbsp;1 (“EA”), empowers and directs the Minister of Environment to compile a list of persons or classes of persons who are not responsible for rehabilitation at a contaminated site and to establish programs and enter into agreements with responsible parties to rehabilitate or manage a contaminated site or prevent the creation of a contaminated site. Lender liability can be an issue depending upon the particular collateral making up the lender's security.

ENVIRONMENTAL LIEN LAW

<ol start="8">
 <li> INCEPTION OF L&M LIEN (Priority of Lien of Deed of Trust or Mortgage): For services and materials, a Builders' Lien can be claimed. This applies to any person who performs any work or service upon or in respect of or places or furnishes any material to be used in making, constructing, fitting, altering, improving or repairing of any erection, building, land, bridge, mine, excavation. BLA &sect;&nbsp;6(1). The lien is for the price of such services and/or materials rendered. The lien attaches on the interest of the owner in property. BLA &sect;&nbsp;8. The lien is limited and cannot exceed the amount owed to the contractor. BLA &sect;&nbsp;11. The lien arises automatically upon the completion of the work, materials, or services. However, the contractor must take certain steps to preserve the lien lest it be extinguished. Parties may contract out of this provision. A claim for a lien must be filed within 60 days of the last work or supply of materials. BLA &sect;&nbsp;24(1). The contractor must then commence an action and register a certificate of pending litigation within 105 days of the completion of the work or supply of materials. BLA &sect;&nbsp;26(1). A claim for a lien must be accompanied by an affidavit sworn by an individual with personal knowledge. An owner who has had work performed or materials delivered must withhold 10% of the payment price or each payment, whether progressive or lump sum. BLA &sect;&nbsp;13(2). This withholding must be maintained for 60 days after the contract has been substantially performed. If the work is substantially completed but not fully complete the withholding is reduced to 2.5% until final completion. BLA &sect;&nbsp;13(3).</li>
 <li> PRIORITY OF REMOVABLE FIXTURES (Priority of Lien of Deed of Trust or Mortgage): A Builders' lien has priority over all judgments, executions, assignments, garnishments, and receiving orders recovered, issued or made after the lien arises. BLA &sect;&nbsp;15(1). As well, the lien has priority over all payments or advances made on account of any conveyance or mortgage after notice in writing of the lien to the person making such payments, or after registration of a claim for such lien. BLA &sect;&nbsp;15(1). Where the land upon which the services or materials supplied is encumbered by a prior mortgage or any other charge, and the value of the land is increased by the performance of the service or materials supplied, the lien is attached to the increased value in priority to the mortgage or other charge. This applies if the owner has consented to the supply of these services or materials. BLA &sect;&sect;&nbsp;8(3)(a), 8(3)(b).</li>
</ol>

LABOR AND MATERIAL LIEN CLAIMS (“L&M LIEN”) - PRIORITY ISSUES

Policies of Title Insurance are becoming more popular with commercial lenders in the Province.

TITLE INSURANCE (COMMERCIAL LOAN POLICY)

Typical standard commercial loan policies are designed for use specifically in Atlantic Canada by most title insurers.

FORMS AVAILABLE TO LENDER

It is possible to request that the title insurer provide special loan coverage via endorsements to the commercial loan policy where the subject matter of the security is unique or otherwise raises legal and/or commercial issues not adequately covered by the conventional standard commercial loan title insurance policy. &nbsp;

Nova Scotia

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Nova Scotia

Nova Scotia

Mortgage Law Summary

Continue reading theMortgage Law Summary for Nova Scotia

Continue reading the
Mortgage Law Summary for Nova Scotia