BarTalk | June 1996

Page 1

I i!.l ~p.tl BA-RAlsso

I

I

"~

u

4J

~

~ "%-

---~ ~

~

~

"".1/o-v

~~~

u"~'

DU B A!\~

Newsletter of the Canadian Bar Association (BC Branch) June 1996 Vol. 8 • No.3

Controversial mortgage program continues to expand new program to process and prepare mortgage applications without any legal advice being provided to borrowers continues to expand in British Co. umbia. The new program has now been implemented by Canada Trust and Surrey Credit Union and is being considered by others. Under the program, when a lender enters in are-financing contract with a borrower, the lender prepares the mortgage documentation in conjunction with First American Title Insurance Company. The loan application is processed by the lender who enters some limited title particulars and the mortgage particulars into a computer database licensed to them by First American. First American then conducts a limited review of title, generally restricted to confirming that the borrower is the owner of the property. Once the . mortgage documentation is prepared, it is delivered to the financial institution's local branch and the borrower is called in to attend to execution. The mortgage is explained to the borrower by an employee of the financial institution. A lawyer or notary public who is arranged through Law line Canada is then called in to witness the borrower's execution of the mortgage documentation as required by Section 42 of the Land Title Act. The lawyer is specifically instructed not to provide legal advice to the borrower and, thus, the borrower is entering into a significant finimcial transaction without the benefit of legal advice. First American has approached the Director of Land Titles to h<we the officer's certification requirements under the Land Title Actwaived or abolished, thereby doing away with the requirement that a lawyer be present to witness the exec~tion of the documents. The Director of Land Titles has indicated that a change to cur-

A

INSIDE President's Message ...... 2 Section Talk .................... 3 Provincial Council Meeting ............................. 7 Registry Q&A _, _____, _____ ¡10 BC Branch Golf Tournament .................. I I Federal government institutes policies for employment equity and dispute resolution ....... 12 Ombudsperson myths debunked ....................... 14 Practice Talk ................. 15 Legislative Update ........ 17

(

rent legislation is unlikely to be forthcoming. First American also approached the Attorney General's office with a request that the authority of the commissioners at financial institutions be expanded from their current limitation of only witnessing mortgage discharges to allow them to witness mortgages being granted by their customers. The Attorney General's office has advised First American that the request raises a number of public policy concerns and that such a change is not likely to be forthcoming. This issue has been extensively reviewed by the Real Property Section (Vancouver) of the C.B.A. Edward L. Wilson, Chair of the Section, has confirmed that the Section does not object to financial institutions preparing their own mortgage documentation or using title insurance in their mortgage transactions per se. A number of financial institutions have prepared documents in-house in recent years. Once prepared, however, the documents are sent to the borrower's lawyer for execution. This offers the borrower a low-cost service, while still providing an opportunity for the borrower to obtain legal advice regarding the transaction. The concern of the Section relates to the fact that the program is structured such that borrowers enter into complicated financial transactions with significant legal implications without the benefit of legal advice. The Section is also concerned that the lawyer witnessing the documents may, notwithstanding the written acknowledgement signed by the borrowers that the lawyer is not acting for them, be perceived by the borrower as being "their" lawyer. It is not difficult to imagine that the borrowers will be under the impression that if Story continues on page / 6


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.