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Realizing on Residential Mortgages
The Ontario Court of Appeal has, in Canada Trustco Mortgage Co. v. Park (2005) 72 O.R. (3d) 480, resolved a conflict between the Mortgages Act and the Tenant Protection Act. The Court had to determine when a mortgagee in possession could terminate a tenancy for the benefit of a third party purchaser.
Canada Trustco Mortgage Co. had realized on a mortgage held against a residential property and, pursuant to a power of sale remedy, had agreed to sell the property to a third party with a closing date of October 3, 2001. However, the property had been previously rented by the borrower to a third party tenant for a fixed term ending March 31, 2002.
Section 53(1) and related sections of the Mortgages Act provide that a mortgagee in possession may obtain possession of a single family home on 60 days notice. However, the provisions of the Tenant Protection Act provide security to residential tenants including protecting such tenants until the end of a fixed term.
The Court of Appeal, upholding the previous decisions of both the Divisional Court and the Ontario Rental Housing Tribunal, held that the terms of the Tenant Protection Act prevail. Accordingly, a mortgagee realizing on security that is occupied by residential tenants cannot terminate a tenancy for the purposes of a sale prior to the end of a fixed term. If a property has more value being sold to a residential user rather than rental income property, this could affect the realization value of lenders.
April 21, 2005 in Financing | Permalink
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Comments
This is very interesting.
Posted by: Toronto apartments for rent | Dec 2, 2005 3:59:54 PM
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