Priorities under the Seniors’ Property Tax Deferral Act and the Seniors’ Home Adaptation and Repair Act
Seniors Home Adaptation & Repair ActSeniors’ Property Tax Deferral ActSeniors’ Property Tax Deferral Act Seniors Home Adaptation & Repair ActBoth of these pieces of legislation provide assistance for Seniors who either can not pay their property taxes as they become due and payable or require assistance to cover the costs of repairs, renovations or adaptations that are reasonably necessary for the maintenance, structural integrity or energy efficiency of the residence or for the health, safety or mobility of the occupants.
Each piece of legislation provides that the Minister can file a caveat, in the land titles office, against the certificate of title for the eligible residence for the loan. Each piece of legislation also provides that upon “the registration of a caveat,.. the charge has the same priority as a mortgage under the Land Titles Act and may be enforced in the same manner as a mortgage”.
Each piece of legislation provides that the debt is payable in full on the “date of the transfer or sale of the residence in respect of which the loan was made”.
So what does this mean when you seen a Caveat under the Seniors’ Property Tax Deferral program or the Seniors’ Home Adaptation and Repair program registered on title to a property you are lending on?
If it is registered on title prior to your advancing funds on your mortgage, you must require the charges to be paid out in full from your mortgage funds as these charges will form a financial property to your mortgage.
If it is registered on title after you have advanced funds, it technically does not form a priority to your mortgage as it is registered with the same priority as if it was a subsequent encumbrance. The difference is that it must be paid off in full with the sale of the property.
Accordingly, if you are foreclosing, you must consider the balance owing on those Caveats, like you would regular property taxes, as forming a priority to your registered mortgage on payout. If the Borrower is selling, they have to sell for sufficient funds to clear all registered financial encumbrances from title. If they don’t have sufficient funds to clear title, but are still selling at what you consider to be market value, you are going to have to treat these Caveats as a priority for payout purposes and decide if you are going to potentially accept less on your charge or foreclose if they can’t complete the sale.
Please note you should be pulling updated titles when you are offering renewals to borrowers that are seniors. These charges affect your loan to value on the property and should be strongly considered on renewal.
As always, we are here for you with any questions, at any time. Please feel free to contact Denise Hendrix at firstname.lastname@example.org
Copies of the legislation are attached for your reference.