Service standards loan taking
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Mortgage Not on DemandWhile our mortgages may contain language such as “on demand”, they are not demand loans. As is further provided in each mortgage, the Letter of Offer governs each loan and default is required before a loan will be called. Capped MortgagesWhen BDC expects to make a further loan to the Borrower, BDC may wish to take a “capped” mortgage which states a higher principal amount than that set out in the Letter of Offer. The actual principal amount for the new loan is governed by the Letter of Offer. If BDC has called for a “capped” mortgage, the amount of the “cap” or stated amount of the mortgage will be expressed in the Letter of Offer as follows: “First readvanceable mortgage in the principal amount of $________. “ This amount will be greater than the loan amount. If there is no principal amount stated for the mortgage in the security section of the Letter of Offer, you can conclude that the BDC is taking a “regular” mortgage where the amount of the mortgage and the loan amount are the same. The capped mortgage is intended to benefit Borrowers by enabling BDC to avoid reproducing the mortgage security in the event of future loans. However, there is no obligation on BDC to make further loans to the Borrower. There is no special form for a capped mortgage. For Newfoundland only, please attach an affidavit stating the amount of the actual advance. This should result in the recording costs being based on the amount of the advance, not the “capped” amount. Mortgage of LeaseFor the mortgaging of a leasehold interest in land, a copy of the lease must be provided, as well as the landlord’s consent, in writing, to the mortgage (if required by the lease). The BDC does not provide a leasehold consent form and accordingly, this must be drafted by you. i. Ontario There is no separate form for leasehold mortgages. Use the statutory form for the Charge/Mortgage of Land with the filed Standard Charge Terms. ii. Atlantic Canada There is no separate form for leasehold mortgages. The standard mortgage can be used to charge freehold as well as leasehold.
Ontario Mortgage Formsi. Mortgages in Electronic Format The following special instructions are to be used for electronic mortgages in those jurisdictions where electronic registration is in place. Attach the BDC’s Schedule “A” (MTG-ONT-Readvanceable (E-REG)). An electronic version of the Schedule (Mortgage Schedule A (oct01).pdf) may be obtained from the Teranet web site. Insert the appropriate number for the BDC’s Standard Charge Terms filed in Ontario - S.C.T. no. 20011. Do not attach a schedule for the repayment terms. There should be no guarantor for the BDC’s mortgage, even if the Letter of Offer calls for a guarantor of the loan. Reporting requirements: please provide an electronic version of the original signed Acknowledgment and Direction addressed to the BDC. Please complete the “Payment Provisions” fields of the electronic Charge as follows: Principal Amount - enter the principal amount of the loan, or for a mortgage collateral to a guarantee, enter the amount of the guarantee. Payments – delete all of the figures so the field is blank in the registered Charge. Interest Rate - enter “Schedule A” NOTE: RE: INTEREST RATE: The mortgage is intended to secure all present and future liabilities and indebtedness of the borrower. In order to provide protection for the BDC in the event of an increase in interest rates payable under the various debt instruments, we require that the Interest Rate on the mortgage (refer to Schedule A) be shown as the BDC’s floating interest rate plus 10%. Although we are secured for a higher interest rate, we are entitled only to interest as determined by the rate in the Letter of Offer, or any other evidence of indebtedness which the borrower may have entered into with the BDC at any particular point in time. Insurance - enter “see Standard Charge Terms”. For all other fields, enter “Schedule A” where appropriate. An electronic assignment of rents is also available from the Teranet web site. ii. Mortgages in Paper Format Use the applicable statutory mortgage form (in Ontario - Charge/Mortgage of Land) and attach the BDC’s Schedule “A” (i.e. MTG-ONT). Also, insert the appropriate number for the BDC’s Standard Charge Terms filed in Ontario - S.C.T. no. 20011. Do not attach a schedule for the repayment terms. Please complete the “Payment Provisions” box (9) of the statutory Charge/Mortgage form as follows: Box (a) Principal Amount - enter the principal amount of the loan, or for a mortgage collateral to a guarantee, enter the amount of the guarantee, or where the Letter of Offer specifies the amount of the mortgage, enter the specified mortgage amount. Box (b) Interest Rate - enter “see Schedule A”. Box (c) Calculation period - enter “see Schedule A”. Box (e) Payment Date and Period - enter “On Demand” NOTE: Although we would prefer to leave this box blank, we are not permitted to do so by the Land Registrar, who will only accept the mortgage for registration if that box is completed. Our choice would be to either fill in the actual dates, or fill in the words, "On Demand". Since it is preferable to keep our options open regarding payment dates to allow the BDC and the borrower the flexibility of changing payment dates during the administration of the loan, we ask our solicitors to insert the words, "On Demand." While this form requires a “demand” feature, it does not make our loans “demand loans”. Each loan is governed by its Letter of Offer and default is required before a loan will be called. Box (j) Insurance - enter “see Standard Charge Terms”. For all other boxes of the “Payment Provisions”, enter “xxx” to delete. Atlantic Mortgage FormsThere are two different mortgage forms; a readvanceable mortgage for the principal indebtedness (the loan amount) and a readvanceable mortgage collateral to the guarantee. Both of our mortgage forms are readvanceable. For collateral mortgages, as our form is now readvanceable, do not attach the guarantee as a schedule to the registered mortgage. Please ensure that whether using the readvanceable mortgage (taken as security from a Borrower) or the collateral readvanceable mortgage (taken as security from a Guarantor), that the amount of the registered mortgage reflects the amount required for the mortgage in the Security section of the Letter of Offer. If no amount is indicated for the mortgage in the Letter of Offer, then the registered amount must be equal to the amount of the Loan which calls for the new mortgage. The amount of the registered mortgage should not be reduced based on the percentage amount of the guarantee. In order to provide protection for BDC in the event of an increase in interest rates payable under the various debt instruments, the interest rate on the Mortgage is shown as BDC’s floating interest rate plus 10%. Although we are secured for a higher interest rate, we are entitled only to interest as determined by the rate in the Letter of Offer, or any other evidence of indebtedness which the Borrower may have entered into with BDC at any particular point in time. In New Brunswick, for the readvanceable mortgage from a Borrower, Optional Mortgage Covenants # BDBC - 538 (BDBC- # 2424 in French) is included in the Mortgage Readvanceable form. An assignment of rents has been filed as Optional Mortgage Covenants # BDBC- 483 (BDBC-#2423 in French). For the collateral readvanceable mortgage from a Guarantor, Optional Collateral Mortgage Covenants # BDBC – 2360 (BDBC-#2372 in French) is included in the Mortgage Collateral Readvanceable form. 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