Generic filters
Exact matches only
Search in title
Search in excerpt
Search in content
Filter by Practice Category
Business Setup & Contracts
Commercial & Business Transactions
Land Assembly & Real Estate Development
Litigation
Mortgage and Loan Enforcement
Mortgage Syndication
Private Mortgage Closings & Administration
Real Estate Closings & Property Law
Wills, Estates & Tax
Filter by Practice Industry Category
Business & Finance
Estates & Tax
Litigation
Real Estate

Tag: section 17

Can a lender charge a mortgage pre-payment penalty under Power of Sale proceedings or once the mortgage term has matured, regardless if it is an Open or Closed Mortgage?

Under section 17 of the Mortgages Act, and pursuant to relevant case law the answer is “Yes” the lender can.  Subject to the wording in the original mortgage commitment/agreement, you will often find that lenders will charge 3 months interest pre-payment penalty if they have to enforce the mortgage via a power of sale proceeding or if you neglected to renew the mortgage once the term has expired and have failed to pay the lender out (within the time allotted pursuant to the lender’s notice).  Also, often enough, the original mortgage commitment/agreement will have qualified wording for “Open” mortgages stipulating that so long as the borrower is not in default, the borrower will be able to pre-pay the mortgage in whole or in part without a penalty or bonus.  However, once in default, a lender can demand the penalty payment of three months’ worth of interest calculated on the then outstanding principle balance, even if your mortgage is an Open one.In relevant case law the courts have often ruled in favor of the lender on disputes over its right to charge penalties pursuant to section 17 of the Mortgages Act, where the borrower was found in default of payment of any principal or interest money. 

Read more