When a loan or mortgage is electronically registered against a property by a lender, it is known as a Charge (a Charge is sometimes synonymous with mortgage). The lender is the Chargee and the borrower is the Chargor. The Chargee will provide the Chargor what is commonly known as a set of Standard Charge Terms (“SCT”). SCT are filed with municipal Land Registrars pursuant to the Ontario Land Registration Reform Act, R.S.O. 1990, and are by reference incorporated into the registered Charge.
Standard Charge Terms vary and are generally lengthy documents. Most importantly, they set out the Chargee’s rights upon the default of charge payments, or in other words, the lender’s right to power of sale over the property that is charged and the the Chargor’s obligations throughout the term of the Charge, for example:
To have good title to the property being Charged; to pay all interest and principal as it becomes due;to keep paying interest on any amounts in default and until the Chargee disposes of the property; to make all payments auxiliary to the property such as realty taxes, insurance, utilities, maintenance, etc.;to keep the land and structures in a good state of repair;in the event of a power sale, to allow the Chargee to peacefully distrain and have quiet possession of the lands and structures; and after default, not to sell, transfer, dispose of the land.
Many lenders also include in the SCT, an explanation of how interest is calculated (in regards to the specific mortgage product) and how the mortgage product associated with Charge works and any prepayment provisions the Charge may contain.
Many clients are handed the SCT and sign an acknowledgment that they have received in their possession the document; however most do not read them. Defaulting on mortgage payments or acting contrary to the terms laid out in the SCT can have serious consequences for Chargors and therefore it is in any borrower’s interest to obtain a copy well before they commit to the financing provided by their lender.