That’s the story of Carolyn Krebs, a Toronto landlord recently sentenced to 15 days in custody on top of a $120,000.00 fine for violations of the Ontario Fire Code. Ms. Krebs failed to comply with fire safety requirements at a rental property despite multiple warnings, putting tenants’ lives at risk. You can read this story as a landlord-tenant matter. But lenders should read it as a tale of collateral and operational risk. Fire Code violations can lead to: 🔥 Municipal work

Vacant home taxes. Luxury taxes. Foreign investor taxes. New York City’s proposed tax targeting certain high-end residential purchasers is the latest reminder that political risk plays a major role in real estate underwriting. Our clients are used to analyzing: 📝 Borrower risk 📝 Market risk 📝 Construction risk 📝 Interest rate risk But increasingly, 𝐭𝐡𝐞 𝐰𝐢𝐥𝐝𝐜𝐚𝐫𝐝 𝐬𝐞𝐞𝐦𝐬 𝐭𝐨 𝐛𝐞 𝐩𝐨𝐥𝐢𝐭𝐢𝐜𝐚𝐥 𝐫𝐢𝐬𝐤. Is it possible that a deal that works today may not

Commercial mortgages are underwritten based on a specific set of facts at a specific moment in time. But properties change. Sometimes quietly. Sometimes dramatically. 🚜 A farm becomes a wedding venue. 🏬 An office becomes residential. 🛍 An industrial site turns into a warehousing hub. And suddenly the property securing your loan no longer looks like the property you originally approved. Sometimes that change increases value. Sometimes it increases risk. And depending on you

One kingdom, many different realities. MPAC recently released its Business Properties Report examining Ontario’s commercial real estate market. And unsurprisingly, the market tells very different stories depending on the asset class. Multi-residential development has surged to levels not seen since the 1970s, family-sized rentals remain undersupplied and warehouse pricing has started to stabilize after years of rapid growth. Some asset classes are thriving. Some are not. Othe

It’s not the overleveraged 30-year-old chasing their third pre-con. It’s the 60-year-old adding new debt. 𝘘𝘶𝘪𝘦𝘵𝘭𝘺. Mortgage debt is now rising fastest among Canadians aged 55–64. Nearly 1 in 3 Canadians who are retired or approaching retirement continue to make mortgage payments on their principal residence, a 3.5x growth since 1999. 𝐓𝐡𝐚𝐭 𝐬𝐡𝐨𝐮𝐥𝐝 𝐦𝐚𝐤𝐞 𝐞𝐯𝐞𝐫𝐲 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐚𝐧𝐝 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 𝐥𝐞𝐧𝐝𝐞𝐫 𝐩𝐚𝐮𝐬𝐞. These borrowers behave ve

You never know what’s going to appear on title. That lesson played an important role in the recent Ontario Court of Appeal decision in 𝐌𝐂𝐀𝐍 𝐇𝐨𝐦𝐞 𝐌𝐨𝐫𝐭𝐠𝐚𝐠𝐞 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧 𝐯. 𝐁𝐫𝐨𝐚𝐝. The situation: 🏚 A lender was trying to sell under power of sale. 🏛 There was a Certificate of Pending Litigation (CPL) sitting on title. 👩🏻‍⚖️ The lower court said it had no jurisdiction to discharge the CPL. 🙅‍♂️ The Court of Appeal disagreed. In the real world, C

The answer, at least in the US, is a fire sale. Commercial real estate across America is now trading at massive discounts compared to valuations from a decade ago. A $68𝐌 Chicago office just sold for $4𝐌. A $176𝐌 Denver complex for $5𝐌. These might look like bargains too good to pass up, but for lenders it means something else entirely. After years of extensions, restructuring, delaying losses and hoping for a rebound, reality finally set in. 𝐓𝐡𝐞 𝐮𝐧𝐝𝐞𝐫𝐥𝐲𝐢𝐧𝐠 �

The Law Society of British Columbia recently grappled with this question in a case involving Edwin Soon, a real estate lawyer in Vancouver. Among other things, Mr. Soon ran a private lending business through his law firm’s trust account. Seem odd? That’s because it is. A lawyer’s trust account is not a business account. It’s not a holding account. And it’s definitely not there to make deals “look legitimate”. But in this case, that’s exactly what it was used for. In his own w

These days, headlines are filled with doom and gloom about Canadian real estate. But a recent "Systemic Risks within the Canadian Housing Market" report by the Canadian Alternative Mortgage Lenders Association makes the case that alternative lending in Canada does not actually pose a systemic risk. Alternative mortgage lending represents a small portion of the overall market. It is largely funded by private capital and tends to operate at relatively low loan-to-value ratios.

A recent horror story out of Miami illustrates how confusing loan calculations can get when a development project spirals out of control. A developer bought almost an entire waterfront condo building to tear down and replace with a luxury condo tower. Everyone moved out. Demolition started. 🧱 Floors, finishings and even the pipes were ripped out. 🏢 Windows were removed. ⚡️ Utilities shut off. Then a judge ruled that the developer had improperly changed the condo bylaws to

We recently worked through a private residential mortgage where nothing went wrong. I repeat: nothing went wrong. 🤯 No surprise writs. No last-minute borrower drama about closing costs. No frantic 10 p.m. calls before funding. Just: 🏠 A realistic loan-to-value 🗓 A clear exit strategy 🔎 Proper disclosure 📝 Clean, enforceable documentation Funds were advanced. Interest was paid. And the exit? Successful. 𝐓𝐡𝐚𝐭’𝐬 𝐢𝐭. In private lending, war stories are entertaining i

Everyone knows a lawyer’s favourite phrase: “it depends…” But when we recently reviewed a Mortgage Commitment for a friend who decided to dabble in private lending, there was no “depends” about it. It was bad. 𝐒𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐚𝐥𝐥𝐲 𝐚𝐧𝐝 𝐥𝐞𝐠𝐚𝐥𝐥𝐲 𝐛𝐚𝐝. Among other issues, the Commitment included: 📈 An interest rate increase triggered by default 📋 Fees and charges that were 4 or 5 times any reasonable, genuine pre-estimate of costs 💰 An interest penalty automati

Surprises can happen, even in a straightforward transaction. Imagine this: a residential private mortgage closing today, my lender client has already transferred funds to my trust account and all security is in place with only 2 items outstanding: home insurance and the borrower’s lawyer’s trust ledger. By 10am, home insurance comes in. Looks good. ✅ Two hours later, the trust ledger comes in. Looks… not so good. ❌ In reviewing the ledger, I see that more than 1/5th of the mo

We were asked to paper a loan assumption that looked simple on the surface. A few years ago, a couple bought a home in the GTA with a large interest-only private mortgage. Fast forward to today: the property is worth materially less, but the mortgage principal hasn’t moved. Payments are current. No default. Yet the LTV is now over 100%. Here’s where it gets complicated. The private lender is facing investor redemptions and needs liquidity. A new lender is prepared to step in