

HSBC Bank Canada

Co-operative Properties

ADDITIONAL INSTRUCTION FOR CO-OPERATIVE PROPERTIES

(Residential Mortgages – For BC Only)

This Additional Instruction is issued by HSBC Bank Canada (“we”, “our”, “us” and the “Bank”) pursuant to the Instructions to Solicitor/Notary (the “Instructions”).

Unless otherwise provided, defined terms used in this Additional Instruction shall have the meanings given to those terms in the Instructions.

Application This Additional Instruction only applies in those cases where the Mortgagor owns a leasehold interest in a co-operative property (a “Co-operative Property”). For the purposes of this Additional Instruction, a Co-operative Property is a residential property which is owned by a corporate vehicle (the “Corporation”) formed solely for the purpose of owning and managing the real estate on behalf of the Corporation’s various shareholders. The Mortgagor is one of the shareholders of the Corporation. The Corporation grants exclusive occupation rights to the Mortgagor (and each of the other shareholders) by way of a lease (the “Lease”) on a particular unit. Overall management decisions for the property and common areas are made by the Board of Directors of the Corporation.

The specific instructions set out in this Additional Instruction with respect to the nature of security documents required in connection with a Co-operative Property supplement the security documents required by the Instructions.

When taking security on a Co-operative Property you will be required to obtain and provide your opinion as to the validity and enforceability of the following security documents:

  1. The Bank’s standard form residential mortgage (as specified in the Instructions). The mortgage will create a mortgage and charge on the Mortgagor’s Lease and its leasehold interest in the mortgaged property (with the priority specified in the Instructions).
  1. Hypothecation agreement whereby the Mortgagor hypothecates all of its common shares of the Corporation (the company/corporation owning the mortgaged property) to the Bank as security.
  1. Power of attorney to transfer stocks and bonds (found on the Bank’s web-site as detailed in the Solicitor’s Responsibilities) duly executed by the Mortgagor.

4.  The original share certificate representing all of the Mortgagor’s shares in the Corporation.

5.  Tripartite agreement (in form and substance satisfactory to the Bank) duly executed by the Corporation, the Mortgagor and the Bank which, among other things, contains the Corporation’s consent to the Bank’s mortgage and contains certain rights and remedies of the Bank in respect of the Lease and the mortgaged property.

  1. Verification statement evidencing the registration of a financing statement under the applicable Personal Property Security Act which perfects the Bank’s security interest in the Mortgagor’s shares in the Corporation for a term not less than the amortization period of the mortgage.
  1. If the Lease is registered against the mortgaged property at the applicable Land Titles Office, then a state of title certificate evidencing the registration of the Bank’s mortgage with the priority specified in the Instructions.

We will require original copies of each of the above described documents together with your solicitor’s final report and opinion in the form specified by the Solicitor’s Responsibilities amended to include your opinion on the validity, enforceability and priority of the Bank’s leasehold mortgage and charge on the mortgaged property and on the validity, enforceability and registration of the hypothecation of shares and tri-party agreement.

Except as modified hereby all of the terms and conditions of the Instructions and Solicitor’s Responsibilities remain applicable to the mortgage loan.

2