Definitions and Terms

 
What is a "private" mortgage?
What is a mortgage in trust?
What is a syndicated mortgage?
What is the definition of "arm's length"?
What is the definition of "charge"?


Q: What is a "private" mortgage?

A: A mortgage is a considered to be a "private" mortgage if the lender is not a Schedule I or II bank, registered loan or trust company, a licensed insurer, or a subsidiary of any of them; pension fund;,or any other entity that lends money in the ordinary course of its business. It is a mortgage or charge on land that secures a loan from a lender in any transaction that is not one of the exceptions listed in subsection 24(2) of By-Law 9.


 Q: What is a mortgage in trust?

A: A mortgage in trust is a mortgage registered  

  • in the lawyer's name in trust, or
  • indirectly in a related (to the lawyer) person's name in trust (e.g. the lawyer's spouse/parent/child/or partner), or
  • indirectly in a related (to the lawyer) corporation's name

A lawyer who holds a mortgage in trust must prepare and maintain a mortgage asset ledger, a mortgage liability ledger and monthly comparisons of these ledgers. These records are described in Section 20 of By-Law 9.


 Q: What is a syndicated mortgage?

A: A syndicated mortgage means a mortgage having more than one investor [rule 3.4-34 of the Rules of Professional Conduct]. These mortgages are often held in trust by a lawyer for convenience and collection purposes.


 

 Q: What is the definition of "arm's length"?

A: "Arm's length" and "related persons" are defined in section 1(1) of By-Law 9 as having the same meanings as contained in section 251 of the Income Tax Act (Canada). For a discussion of how these definitions apply to individuals, corporations, trusts and partnerships, review Understanding the Two-Lawyer Rule: The "Related Persons" Exception. Though this resource was created to help lawyers interpret the definitions contained in the Act as they apply to rules 3.4-16.7 to 3.4-16.9 of the Rules of Professional Conduct, the definitions also apply for purposes of By-Law 9.  Reference should also be made to the section of the Act itself.


 Q: What is the definition of "charge"?

A: For the purposes of By-Law 9 "charge" is defined in section 1(1) as having the same meaning as given it in the Land Registration Reform Act: "charge" means a charge on land given for the purpose of securing the payment of a debt or the performance of an obligation, and includes a charge under the Land Titles Act and a mortgage, but does not include a rent charge.