ACMA Summary - 2023 - Alberta

• Year: 2023

PROVINCE OF ALBERTA, CANADA FORM SECURITY INSTRUMENT USED: Alberta operates under the Torrens System. The security interest in land is constituted by means of a charge. However, the term ‘mortgage’ is used to describe the charge even though it is not referring to the common law definition of mortgage as a security interest in land. Land Titles Act, R.S.A. 2000, c. L-4 § 1(o) (Can.) (the “Land Titles Act”). As per § 103 of the Land Titles Act, a mortgage registered under the Act does not operate as a transfer of the land charged by it. RECORDING REQUIREMENTS: The Land Titles Act establishes a public registry of land ownership and the registration of other interests in land at a central registry called the Land Titles register. The interests are then guaranteed by the Province of Alberta. The registration of an interest in land at the Land Titles Office is proof of the validity of the interest, absent any evidence to the contrary. Land Titles Act § 54 (Can.) STATUTES TO BE WAIVED: Expropriation Act, R.S.A. 2000, c. E-13 § 49 and 52 (Can.), which provide that a mortgagee may be restricted to recovering the market value of the mortgage and that a mortgagee is limited in certain circumstances to receiving 3 months’ interest. The Fire Prevention (Metropolis) Act 1774, which provides that insurance proceeds must be used for the rebuilding of the improvements on the lands. UNUSUAL TREATMENT OF STANDARD PROVISIONS: There are no unusual treatment of standard provisions. However, it is worth noting that parties can modify or exclude any of the usual clauses deemed to be included in the instrument by express declaration in the mortgage. Land Titles Act § 59. Mortgages should contain the short forms of words set forth in Column 1 of Schedule 2 of the Land Titles Act, which have the effect of the words contained in Column 2 of Schedule 2. Land Titles Act § 112 (Can.). It should also be noted that a mortgagee may file a standard form mortgage with the Registrar of Land Titles. Land Titles Act § 113(1) (Can.). SECURING FUTURE ADVANCES: As a general note, the priority between mortgagees and other instrument holders is determined according to the serial number assigned to the instrument when it is filed or registered. Land Titles Act § 14(3). When a mortgage is registered, it obtains priority for all advances and obligations secured pursuant to the terms of the mortgage, notwithstanding that they are made or incurred subsequent to the registration of any other instrument or caveat. Land Titles Act § 104(1). A mortgage that is registered that provides for a revolving line of credit obtains priority for all advances and obligations secured pursuant to the terms of the mortgage notwithstanding that the advances and obligations are made or incurred subsequent to the registration of any other instrument or caveat, and that at any time during the term of the mortgage there may not be any outstanding advances to be secured. Land Titles Act § 104(2). If a mortgagee refuses to make, or a mortgagor has and exercises a right to refuse to accept or be bound by, any further advances that would be secured, the mortgagee shall, on the mortgagor’s request, provide a discharge of the mortgage as to the further advances. Land Titles Act § 104(3) (See also “Labor and Material Lien Claims” below). SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL: Pursuant to both common law and the express terms of most mortgages, a mortgage lender may recover “protective disbursements” (reasonable costs of property maintenance and repairs and other reasonable costs incurred for the protection of or preservation of the property), including taxes, utilities, insurance and certain other reasonable costs incurred in connection with mortgage enforcement, together with interest thereon at the mortgage rate. These costs are secured by the mortgage in the same priority as mortgage principal (unless the amounts advanced cause the total credit to exceed the stated principal amount of the mortgage). However, a mortgage lender is not entitled to recover costs incurred to pay for voluntary improvements to the property even if the work increases the value of the mortgaged property and such cost is expressly authorized by the mortgage terms because borrowers cannot contract out of their common law right of redemption. Court-appointed receivers are generally not subject to this limitation on voluntary improvements because such work and related costs must be approved by the Court. TRUSTEE UNDER DEED OF TRUST PRACTICE IN ALBERTA: There is no prescribed form for a deed of trust. Generally, they are used when bonds are to be issued to a number of investors either through a public offering or a private placement. Debentures are a more common form of land security instrument in larger commercial loan transactions because a single instrument can be used to grant security over multiple properties in multiple Canadian provinces and typically include both the real and all related personal property as secured collateral (thus avoiding separate, potentially inconsistent, mortgage forms and additional personal security instruments on a province by province basis). But even where a debenture is used, many Canadian lenders still require additional personal property security instruments (typically a general security agreement) out of an abundance of caution. CORPORATE OR INDIVIDUAL: The trustee may be corporate or individual, but where true deeds of trust are used, there are trust companies that perform such functions. RESIDENCY REQUIRED: No residency required. However, in order to register a mortgage in favour of a trustee in Alberta, it must satisfy certain requirements (See “Lender Qualification and/or Licensure” below). FORECLOSURE BRIEF DESCRIPTION OF PROCEDURE: The mortgagee may, upon default of payment, have recourse to the remedy of foreclosure. Law of Property Act § 39. The right to foreclose does not arise until repayment has become due at law. Repayment is due at law when the legal date for redemption has passed, or if the mortgage has by its terms made the monies due on breach of any term of the mortgage, on the occurrence of any such breach (such failure to make due payment of interest or an instalment of principal). The mortgagee may commence an action for foreclosure by serving a statement of claim on all persons interested in the equity of redemption. Alberta Rules of Court, A.R. 124/2010 § 3.2(1) (Can.). Unless the Court orders otherwise, an affidavit of value must be filed before an application for foreclosure is filed. Alberta Rules of Court § 9.30. Before an application is filed for a redemption order, an order that secured property be offered for sale, a foreclosure order, an order confirming sale, an order for sale to the plaintiff or an order appointing a receiver, the plaintiff must file: (a) a certified copy of all the current titles to the secured land; and (b) if the secured property includes chattels, the...