𝐌𝐨𝐫𝐭𝐠𝐚𝐠𝐞 𝐞𝐧𝐟𝐨𝐫𝐜𝐞𝐦𝐞𝐧𝐭 𝐢𝐬 𝐥𝐢𝐤𝐞 𝐚 𝐛𝐨𝐱 𝐨𝐟 𝐜𝐡𝐨𝐜𝐨𝐥𝐚𝐭𝐞𝐬

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, CPLs registered on title can:

🥶 Freeze a deal.

😨 Scare off buyers and lenders.

😯 Derail a power of sale even when all proper steps have been taken.

In the Broad decision, the Court confirmed two things that should matter a lot to lenders:

1. A CPL on title 𝐝𝐨𝐞𝐬𝐧’𝐭 𝐚𝐮𝐭𝐨𝐦𝐚𝐭𝐢𝐜𝐚𝐥𝐥𝐲 𝐤𝐢𝐥𝐥 your power of sale.

2. Courts do have discretion to discharge a CPL 𝐰𝐡𝐞𝐧 𝐢𝐭 𝐢𝐬 𝐣𝐮𝐬𝐭 𝐭𝐨 𝐝𝐨 𝐬𝐨, especially where a mortgagee is exercising a valid power of sale. 

The Court made clear that a CPL is not untouchable and can be discharged when it is necessary to allow the land registry to reflect the 𝐠𝐨𝐨𝐝 𝐭𝐢𝐭𝐥𝐞 that a purchaser under power of sale is entitled to receive. 

So if a CPL appears on title during enforcement, don’t assume the file is dead.

Imagine lining up a buyer, negotiating terms, and getting ready to close only to discover a CPL registered weeks earlier by someone claiming an interest in the property.

There is still a path forward.

The real fight isn’t always about the mortgage.

Sometimes it’s about clearing title so that a sale can actually close.