Registering A Mortgage Without Someone’s Knowledge

Question

“I have a client who thinks her husband may have placed another mortgage on their home without her knowledge.  I heard you can do a title search down at the courthouse.  Is that correct?  How does that work? ”

J.S. from Ontario

 

Answer
Yes, your client (or anyone for that matter) can run a title search on any property, anywhere in Canada. There are a few ways to do this:

  • Do it yourself – you can go down to your local courthouse and do the search yourself for a relatively low fee.  For Ottawa properties, you or your client could go down to the courthouse, and pull basic title information for around $10.  This will provide you a list of all documents registered against the title of the property.  If you see a mortgage charge, you can then request those extra documents for an extra fee.
  • Hire your lawyer – any real estate lawyer will have access to local title information from their computers, if the information is available online.  However, not all title information may be available in electronic format.  For some areas, a title searcher will be hired, who will go to the courthouse and manually look through records to pull title information.  Depending on how much your lawyer charges, this may or may not be an expensive method to use.
  • Hire a third-party title searching company – over the last few years, many companies have begun offering title searching services online.  However, that doesn’t mean you can view the information online yourself.  Usually you can order a title search online, and they either manually or electronically pull the title information and send it to you.  Basic title searches are fairly cheap, but a full title search can be $60 or more.  Note that you do NOT need to live in the same city as the title search. So if you’re thinking about buying remote property, you can hire a company to check title for you.

 

It is unlikely that your client’s husband was able to register a mortgage on the property title without her knowledge, unless one of the following is true:

  • Your client is not on title – If your client’s husband is the only one on the property title, then it would be easy and completely legal for him to add another mortgage without her knowledge. Her signature is not required.
  • The property was financed many years ago– For many years now, lawyers have been required to check a person’s ID each time they come into their office to sign documentation, especially for a real estate transaction.In the past, if a lawyer knew his client, he would check their ID once, and then maybe keep a copy on file for every future transaction (this is how it worked for me when I got started investing).  Now they must obtain a copy every time a transaction occurs.  So your client’s husband would not be able to forge a signature, because the lawyer would require your client’s ID before completing the transaction.However, if your client’s husband added extra financing many years ago and the lawyer was flexible in having paperwork signed, there is a small chance it could happen.
  • Power of Attorney – If your client signed a Power of Attorney document so her husband could do this on her behalf, then he could legally add any financing he wanted on the property.  In much rarer situations, it is possible this could be done with a forged Power of Attorney.

 

The easiest way to confirm the situation is for your client to simply run a title search herself, or ask her lawyer to do it.  That will show everything that is registered against the proeprty, and prove once and for all whether or not any extra financing was done without her knowledge.

 

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4 comments
Conrad Pilon

I do not have a comment but I have a question.

Can an individual (not a lawyer or real estate person) register a second mortgage at the Ontario Land Registry Office.

Many thanks

Reply
    Paul Blacquiere

    Hi Conrad,

    That’s a good question! I know anyone can search land titles or registry systems (for a fee), but I wasn’t sure about registering documents or changing information.

    I figured it varies by province, so I did a quick search and found 2 links – one for Ontario, one for BC.

    https://www.ontario.ca/page/overview-land-registry – Ontario
    https://ltsa.ca/property-information – British Columbia

    I know contractors can register liens against property for unpaid work done. However, I’m not sure if you can register a mortgage yourself – the services of a lawyer seem to be required in both provinces.

    Otherwise I could imagine it causing all kinds of problems with fake mortgages being registered.

    If you want more info, I recommend contacting a lawyer to find out what can and cannot be done in person. Or you could always contact your land titles or registry office directly.

    Hope this helps

    Reply
Ronald West

Re: Registering a Mortgage Without Someones Knowledge

There is another way whereby a Joint Tenant can mortgage his or her equal ownership share (usually 50%) where there are two Joint Tenants.

Joint Tenancies are the most common type of Registration for two or more owners, generally husband and wife but not always, whereby the ownership interests are equally divided, all Joint Tenants are personally guaranteeing the ENTIRE amount of the mortgage covenant (not only their apportionate share), and each Joint Tenant enjoys the Right of Survivorship, to wit, if one of the Joint Tenants dies, the other Joint Tenant(s) receive a transfer of ownership of the deceased’s ownership interest, without a deemed sale.

So, say the husband wants to buy some Income Producing real estate but has no cash and his wife won’t co-operate because she doesn’t like “risky” investments, lol.

He can mortgage his half ownership and the Land Title/Land Registry Office will automatically split the title into a Tenancy In Common, whereby either party now owns a 50% Undivided Interest in Land, and can now charge their own respective ownership interests as they please, or even sell their ownership interest outright to a Third Party.

It is important to note that although the ownership interests are splitting the title, any underlying mortgage still obligates both former Joint Tenants and the original terms and covenants.are still in effect, unless the mortgage is modified.Essentially the full amount of the mortgage applies FULLY to each now split interest, and both parties still are liable for all of the mortgage balance and covenants.

This means that in the event of a default, the Mortgagee can Foreclose on his the hapless husband’s half ownership interest in land. It is very difficult to find a lender for this type of transaction however, as it is very risky and the Lender will run into all kinds of obstacles because the Wife (remember her), she owns the other half clear title, and will likely raise all kinds of objections in Foreclosure Court, especially if she has a lawyer, and Equity Law will usually prevail and the Judge will grant her a lot of extra considerations and a lot of time, especially in the event that the husband was sneaky and did not tell her about it..

Very messy indeed. Any wise lender will generally require at the outset that the wife or husband, as the case may be, get Independent Legal Advice, in order to cover himself against a wife later claiming that she had no knowledge of the mortgage. Then the lender can proceed with the foreclosure without too much difficulty.

It is entirely possible that the wife will end up with a new partner once the foreclosure process is complete and Order Absolute given to the lender. The new owner of the other half of the property can sell it, transferred it, encumber it, lease it, etc.

This is definitely not a bank deal. But it is an option for those wanting to buy more real estate and need cash and IF you can find a lender. But if the wife or husband or other Joint Tenants will co-operate, go get a conventional mortgage from a bank or even a private lender. The interest rates will be substantially less.

Reply
    Paul B

    Hi Ronald, Thanks for the alternate scenario. I’m curious… are you a lawyer? You have a very detailed knowledge of law in your province.

    I’m not sure how good of an option this would be for those needing cash and wanting to buy more real estate. You either: A) risk losing your spouse or B) keep your spouse, but lose the benefit of Right of Survivorship. Neither option is good..

    In any case, as you mentioned, I think the hardest part would be finding a lender that would agree to this sort of arrangement.

    Paul

    Reply
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