GENERAL INSTRUCTIONS FOR LAWYERS, INCLUDING NOTARIES PUBLIC IN BRITISH COLUMBIA
Canada except Quebec
Dear Sir/Madam:
National Bank of Canada (the “Bank”, “we” or “us”) hereby appoints you to act on our behalf in attending to the preparation, execution and registration of charge(s)/mortgage(s) (a “mortgage”) in favour of the Bank, and all ancillary documents that may be required pursuant to a mortgage transaction (your “mandate”).
From time to time, we will send you detailed information relating to a specific mortgage transaction on a form entitled “Specific Instructions to Lawyer” (each instruction sheet, a “specific mandate”) Each specific mandate will provide information on the borrower(s) (collectively, a “borrower”) and the property to be mortgaged (the “property”). It is your responsibility to ensure that each mortgage and the other security documents conform to these instructions and the terms contained in each specific mandate. If a specific mandate is sent to you via an e-platform, you must accept the mandate within two business days[1] of receiving it, during business hours (between 8:30 am and 5:00 pm). If you do not accept the mandate within the prescribed timeframe, we may send it to another lawyer or notary public (British Columbia only) without further notice.
Additional instructions (F.30429-SAP-012) apply to mortgage financings for the construction, renovation or other improvements of the property or for buying a new construction house.
INSTRUCTIONS
For each mandate that you accept, you confirmthat you are a lawyer in good standing with your provincial law society and you are insured to complete the mandate, or in British Columbia only, you are a notary public in good standing with the Society of Notaries Public of British Columbia, and, if registering the mortgage electronically, that you have been issued a valid digital signature by the authorized authority.
These instructions are not exhaustive. It is your responsibility to demand all documents, to conduct all searches, and to take all necessary steps that a prudent and careful solicitor would carry out with respect to a mortgage transaction and the specific circumstances of any transaction in order to protect the interests of the Bank.
FRAUD WARNING
If the mortgage funds are being used to purchase a property you must advise us if the price listed in the specific mandate is not the same as the price in the purchase agreement or the amount paid on closing for the property. If the prices do not match up and we suffer a loss, we will seek to recover such loss from you.You must also advise us if (a) the property value has significantly increased over a short period of time, or (b) if the seller named in the purchase agreement was not the registered owner of the property when the agreement was signed, or (c) if the purchase agreement has been amended to provide for significant repairs to be made by the borrower(s), or (d) if there are unusual credits on the statement of adjustments in favour of the borrower(s), including any deposits not included in the purchase agreement. If you do not advise us of these kinds of irregularities in the file, and we suffer a loss, we will seek to recover such loss from you and report you to your professional regulating body.
You must notify us immediately of any material fact that becomes known to you, which, in your reasonable opinion, might adversely affect our decision to make advances available or to advance any funds under a particular transaction.
Your responsibilities include, without limitation, the following:
- TITLE SEARCHYou are to examine title to the property to ensure that the borrower holds or will hold good title to the property in fee simple, free and clear of any liens, encumbrances, or other charges or interests (other than conventional public utility easements or common rights of way for additional ingress and egress), other than those authorized by the Bank either in the specific mandate or in writing to you.
You are to ensure that the Bank holds or will hold a valid first ranking Mortgage against the property and assignment of rents if applicable, as specified in the specific mandate.
If the Bank’s mortgage is not or will not be a first ranking charge, you must tell us whether the mortgage(s) ranking in priority to the Bank’s mortgage guarantees additional advances or whether they secure revolving credit.
You must advise us of any discrepancies in the legal description, registered owners, title defects, encroachments, encumbrances, easements and any other restrictions, which in your opinion could affect the marketability of title or our rights. You must take any appropriate measure as directed by the Bank or as a prudent solicitor would take to correct such defect(s).
If there is any specific legislation or by-law that would affect our rights as mortgagee you must notify us accordingly.
You must also confirm that no executions or judgments affect the property, that there are no work orders or deficiency notices outstanding against the property and that all zoning and other restrictions have been complied with, or obtain title insurance where applicable.
You must ensure that any applicable marital legislation dealing with a spousal or common law interest in the property is complied with and that the mortgage has priority over any such interest.
If this is a transaction to which the Western Law Societies Conveyancing Protocol applies you should refer to the protocol section below.
- SURVEYOR’S CERTIFICATE / SURVEY / REAL PROPERTY REPORT
The survey must include, without limitation, the municipal address (if available), the legal description, measurements and boundaries, and all buildings and their respective dimensions and distances from the specified boundaries.
a) Survey must not disclose any irregularity: You must ensure that the survey discloses no material encroachments which could affect the marketability of the property for the Bank and that the location of the buildings on the property complies with all applicable by-laws and regulations and restrictions. If the Survey does disclose any irregularity you must mention this in your preliminary report (F.18433SAP-012) and propose an appropriate solution, as required by section 10 below.
b) Survey dated more than 5 years prior: The Bank may accept a survey older than five years provided such survey is accompanied by a statutory declaration of the present owner(s) confirming there have been no changes to the property since the date of the survey. If this declaration is not provided, then you must require that the borrower(s) obtain a new survey.
c) Necessity for a new survey: It is your responsibility to ensure that a new survey is obtained if the particular circumstances of a property warrants. If this cannot be done, see paragraph 2(e) below.
d) Use of the survey: It is your responsibility to ensure that the survey can be used in a mortgage financing.
e) No survey Available: If a survey is not available, or if one is available but it does not meet the requirements set out in sections 2a) – 2d) above, we will accept that the borrower obtain title insurance issued by any of the companies listed in Appendix 1.
Western Protocol: If a survey is not available, or if one is available but it does not meet the requirements set out in sections 2a) – 2d) above,the Bank will rely on your opinion issued in accordance with the Protocol. Please refer to Protocol section below for further details.
- TITLE INSURANCEIf title insurance is obtained, you do not have to address potential liabilities covered by the insurance policy. However, you must ensure that the premium is paid and follow all instructions of the title insurance company. You must provide the Bank with the title insurance certificate number and the name of the title insurance company prior to or at the time of making your disbursement request. Additional instructions relating to title insurance are included in Appendix 1 to this mandate.
Western Protocol:Funds may be advanced prior to the registration of a mortgage, provided that you have complied with the Western Law Societies’ Conveyancing Protocol as adopted by your law society (or Society of Notaries of B.C.) and have acted according to section 16 below.
4.PROPERTY AND OTHER TAXES / All property transfer and realty taxes and levies owing must be paid up to the date of disbursement of funds. A municipal tax certificate must be obtained to confirm payment of all realty taxes.5.CONDOMINIUM / If the property is a condominium or strata unit, you must obtain an estoppel or status certificate in the form stipulated by applicable provincial legislation. The certificate must state, among other things, that all common expenses are paid to the date of advance, no special assessments levied remain unpaid, there are no pending increases to the common expenses on the property, the condominium or strata corporation is not party to any legal action, no unbudgeted major repairs are pending for the condominium or strata, and fire insurance coverage for the building is in full force and protects the Bank against any loss, and if applicable under provincial legislation, the condominium’s or strata’s reserve fund study is not overdue. You must advise us of any information disclosed in the estoppel certificate that may have a material adverse effect on the property, the borrower or our security. Please retain the estoppel certificate, without forwarding same to the Bank.
6.WATER POTABILITY / If water on the property is not supplied through municipal infrastructure, a water potability certificate is required.In the absence of such certificate, title insurance may be obtained.
7.FIRE AND EXTENDED COVERAGE INSURANCE / You must ensure prior to advancing funds that fire and extended coverage insurance for the risks described in the standard mortgage/charge terms for the full replacement value is in full force. National Bank of Canada must be named first loss payee, and the policy must include the standard clause for mortgaged properties required by the Insurance Bureau of Canada. For properties with 5 or more units, obtain proof of insurance including protection for rental income. For condominium or strataproperties you must ensure that the borrower has also obtained insurance for improvementsand upgrades of their condominium or strata unit.
8.PREPARATION
AND COMPLETION OF MORTGAGE / We will not review or approve any draft or final documents. We are relying on you as our counsel to properly complete and register the mortgage and will rely on your opinion to that effect.If required in your province, have the borrower and any guarantor(s) acknowledge receipt of a copy of the Standard Charge/Mortgage Terms prior to signing the mortgage.
It is your responsibility to either advise borrower’s counsel or carefully explain to the borrower that the mortgage will stand as security for all the present and future financial obligations of the borrowers owing to the Bank, whether incurred jointly or individually, or whether incurred under the mortgage loan or otherwise.
Instructions for Completing the Registration Form for a Mortgage
When completing the registration form for a mortgage please fill out the relevant information box with the terms listed below:
Standard Charge Terms: For mortgages to be registered in British Columbia, Alberta,Saskatchewan, Manitoba, or Ontario you must obtain the correct document number from F.18955-SAP-012.
For mortgages to be registered in New Brunswick, you must obtain the correct document number from F.18435-SAP-012.
Interest Rate:“20% per annum” (except in Nova Scotia, Prince Edward Island, Newfoundland and Labrador)
Balance Due Date:“on demand”
Insurance Amount:“full replacement value”
Address of the mortgagee: / Register the business center address indicated in the specific mandate.
Particulars of Security
(New Brunswick only): / “The Mortgagor mortgages to the Mortgagee the specified parcel as collateralsecurityandcontinuingsecurityforpaymentbythe MortgagortotheMortgageeofallpresentandfuturedebtsand liabilities, matured or not, direct or indirect, absolute or contingent, now or at any time due or owing to the Mortgagee by the Mortgagor whetherasprincipaldebtororsuretyandwhetherincurredbythe Mortgagor alone or jointly with any person or otherwise, together with interest and other amounts owing under this Mortgage from the date of any advance at the Interest Rate; but it being agreed that this Mortgage atanyonetimeshallsecureonlythatportionofsuchdebtsand obligationsoutstanding at such time which does not exceed the sum of Dollars(the "PrincipalSum")togetherwithinterest thereon. All debts and liabilities secured by this Mortgage are furtherdefined and referred to in this Mortgage as the "Indebtedness".
For mortgages to be registered in Alberta and Saskatchewan please use F.18956-SAP-012 as the registration form.
For mortgages to be registered in Nova Scotia, Prince Edward Island, Newfoundland and Labrador, please use form number F.18192-SAP-012.
If required in your jurisdiction, you will give notice of the mortgage to the holders of any permitted registrations.
9.IDENTIFICATION
OFPARTIES / Take appropriate legal steps to verify the identity and capacity of the persons named in each specific mandate. If the borrower is represented by an agent who holds a valid power of attorney or by any other representative, you must confirm in the section “Other comments” of your preliminary report that the power of attorney or the equivalent document is valid, no matter where it was signed, and that the agent or the representative has the right to sign the mortgage documents and the credit agreement as if they were signed by the borrower. If the specific mandate does not mention an agent or a representative whereas the mortgage documents or the credit agreement must be signed by an agent or a representative, you must advise us as soon as possible.
If the borrower or any other party is a corporation or trust/trustee, obtain a certificate of status and verify the party’s capacity to act and contract a loan by obtaining the relevant constituting documents, by-laws and resolutions.
Independent Legal Advice (ILA)
We are relying on you to determine whether any party requires independent legal advice in relation to their role in a financing. This includes any borrower, mortgagor, guarantor or consenting spouse.
10.PRELIMINARY REPORT / You must provide us with a preliminary report (F.18433SAP-012)at the latest 3 business daysbefore the signing date for the credit agreement and mortgage. You must inform us of any irregularities in the file and their effect on our security. Your preliminary report must also contain your recommendations as to how such irregularities can be addressed.
If you received the mandate via an electronic platform, you must sign your preliminary report by using your electronic signature and send it to us via the electronic platform.
11.REQUEST FOR DISBURSEMENT / You must request disbursement of the funds by completing the “Request for Disbursement” section in your preliminary report. Please confirm the scheduled disbursement dateof single disbursement or the scheduleddate of the first disbursement (in the case of progressive disbursements) and amount to be disbursed. Please refer to the specific mandate and the additional instructions for the conditions of the disbursements in the case of mortgage financings for construction / renovation / new construction house.
We require at least 2 business days prior notice for any changes to the disbursement date. If the Bank does not receive any notice of change we will disburse the funds to your trust account in accordance with the instructions in your preliminary report.
We will refuse to disburse funds if information in your preliminary report is missing or incomplete.
You must notify us immediately if there is a change in the timeframe for the closing of the transaction occurring AFTER the funds have been sent to your trust account.
Payment of Debts
Please note that in certain cases (notably internal refinancing) we may reimburse any mortgage debt owing to ourselves directly. Where this is done the Bank will send you a status report confirming the reimbursement of our debt. If we choose not to reimburse ourselves directly, we will send you the funds required to reimburse any amounts owing to the Bank.
If the mortgage debt to be reimbursed(notably external refinancing) belongs to another lender, you must proceed with such reimbursement.
The surplus amount of the refinancing may not be sent to you in whole or in part if these funds are used to pay certain personal debts as agreed to with the borrower or disbursed directly to the borrower.
All payments of debts issued by the Bank will be made as of the date of single disbursementor the date of the first disbursement (in the case of progressive disbursements) indicated by you in your Preliminary Report. If there is a risk that the mortgage security will not be registered in time and that the Bank does not hold a first ranking charge as required, please advise the Bank at least 2 business days before the date of disbursement.
If the financing is insured by a mortgage insurer (CMHC or Genworth), we will indicate whether the amount of the premium has been deducted from the amount of the financing in the Confirmation of Disbursement (F.11354-SAP-012) that we will send to you.
12.SIGNATURE AND REMITTANCE OF DOCUMENTS TO BORROWER / Obtain all signatures required for any credit agreement, mortgage and other related documents as applicable.
Credit Agreements
The credit agreement which includes the cost of borrowing disclosure statement required under the Bank Act, must be signed on the same day as the mortgage documents. A copy must be given to each borrower as well as any guarantors.
Use the credit agreement provided to you by the Bank with the specific mandate. Should the terms of the credit agreement change at a borrower’s request before the disbursement date, the Bank will provide you with an amended version of the credit agreement to be signed by the borrower and guarantor, when applicable. We are responsible for the content of the credit agreement, and no amendments or hand-written changes will be accepted.
The financing terms offered to the borrower by the Bank are valid until the disbursement date indicated in the specific mandate. The credit agreement must be duly signed on or before that date. If not, a credit agreement with new financing terms, including a new interest rate, will have to be signed.
If a borrower is not also a mortgagor, you must prepare a Certificate of acknowledgement to be signed by such borrower at the same time as the credit agreement is signed. A person is a borrower but not a mortgagor when they are signing a credit agreement to contract for a mortgage debt, but are/will not be registered on title as an owner of the property being mortgaged.
The certificate must state the following:
Certificate of acknowledgment
I, [insert full legal name], am a borrower under the [insert title of credit agreement] dated [insert date] between the National Bank of Canada and[insert names of parties].
I have signed the credit agreement as a borrower and understand that I am liable to the National Bank of Canada for repayment of the debt in full in accordance with the terms stated in the credit agreement.
I am not, and I will not be, an owner of the property being mortgaged. My name will not be registered on title to the property. The property is located at[insert legal description/municipal address].
I have received a copy of the registration form for the mortgage, and the standard mortgage charge terms number[insert document number].
A copy of this Certificate of Acknowledgement may be provided to National Bank of Canada.
A copy of this certificate should be given to the borrower with the original kept in your file.
Authorized Signatory
We authorize you to have the credit agreement, the mortgage or the documents related to the amendment of the mortgage (as applicable) signed on our behalf by anyone you designate to act for such a purpose. If the signatory is not a member of a recognized professional order, you must have the person sign a confidentiality agreement before signing the documents. A copy of which must be kept in your files. A sample confidentiality agreement is attached as Appendix 2.
Except in the case of fraud or intentional fault, the person who you choose to sign these documents on our behalf is released from all liability except that set out in the confidentiality agreement. You are responsible for (1) obtaining all required signatures on all transaction documents and (2) the content of the documents.
13.MAILING AND RETENTION OF DOCUMENTS / Within 20 business days of the date of single disbursement of funds or, within 20 business days of the date of the firstdisbursement of funds in the case of a loan with progressive disbursements, you must send us the following documents :
a)Duly signed credit agreement(s);
b)Duly executed guarantee(s) [F.18219-SAP-012], if any;
c)Fire insurance policy duplicate or the “mortgagee’s copy” if the mortgage amount secured is for (i) $500,000 or more for residential properties with 6 units or less, or (ii) $1,000,000 and over for residential properties with 7 units or more;
d)Copy of any title insurance policy;
e)Copy of an acknowledgement of receipt of standard mortgage/charge terms for transactions in provinces where provincial legislation requires it.
You must send us your Final Report (F.28657-SAP-012) within 20 business days of the date of single disbursement of funds or within 20 business days of the date of the last disbursement of funds in the case of a loan with progressive disbursements. If you received the mandate via an electronic platform, you must sign your final report by using your electronic signature and send it to us via the electronic platform.
You must keep all documents used in executing your mandate, namely those related to any mortgage and credit agreement, for a minimum period of 10 years.
14.WESTERN LAW
SOCIETIES CONVEYANCING PROTOCOL (B.C., Alberta, Saskatchewan & Manitoba) / The Bank accepts the use of the Western Protocol.It is your responsibility to review the Protocol applicable in the province where the mortgaged property is located to determine whether or not it may be applied to a particular mortgage transaction.Mortgage transactions in B.C., Alberta, Saskatchewan and Manitoba may close in accordance with the Protocol and also in B.C., in accordance with the guidelines of the Society of Notaries Public of British Columbia for the issuance of an Opinion Letter/Residential Site Survey Certificate.
For transactions to which the Protocol applies, you are authorized to advance funds in accordance with the terms of the Protocol and the instructions of your specific mandate, subject to the following: