Mortgage

How BC law treats it

A BC mortgage is registered in the land title office under the Land Title Act, RSBC 1996, c 250, usually on a Form B with standard mortgage terms filed by the lender. Registration gives the mortgagee priority according to the order of registration, so a first mortgage ranks ahead of later charges. The Property Law Act, RSBC 1996, c 377 supplies further rules. The mortgage term is the period the rate and conditions apply, which is usually shorter than the amortization. Commercial and private lending often uses vendor take-back mortgages, second mortgages and an assignment of rents. Interest and repayment terms are set by contract, subject to federal limits. The Interest Act, RSC 1985, c I-15 requires a statement of the principal and interest calculated yearly or half yearly for blended payment mortgages (s. 6), prohibits a higher rate on arrears (s. 8), and lets a mortgagor other than a corporation prepay after five years with three months' interest (s. 10). The Criminal Code, RSC 1985, c C-46, s. 347 sets a criminal interest rate of 35 percent APR, in effect since January 1, 2025; under the Criminal Interest Rate Regulations, SOR/2024-114, business loans to non-individual borrowers are capped at 48 percent APR between $10,000 and $500,000 and exempt above $500,000. On default, a BC lender cannot simply take the property. It brings a foreclosure proceeding by petition in the BC Supreme Court under Rule 21-7 of the Supreme Court Civil Rules, BC Reg 168/2009. The court usually grants an order nisi with a redemption period, commonly six months for residential property, during which the borrower can pay. The court may then approve a sale, grant judgment on the borrower's personal covenant for any shortfall, or, less commonly, grant an order absolute transferring title to the lender.

What it means for your business

Mortgages finance most commercial real estate purchases, developments and refinancings in BC, and private mortgage lending is common for businesses that do not fit bank criteria. Priority, default clauses, prepayment terms and personal guarantees decide how much risk each side carries. Borrowers in default have more time and court oversight in BC than many expect, while lenders need properly drafted and registered security to enforce efficiently. Example: A Surrey developer sells a lot and takes back a second mortgage for part of the price. When the buyer defaults, the developer petitions for foreclosure in the BC Supreme Court, and the court sets a redemption period before approving a sale.

Risks and common mistakes

Assuming a lender can take the property on default without a court foreclosure proceeding. Failing to register the mortgage promptly, losing priority to a later charge. Stating interest in a way that breaches Interest Act disclosure rules or approaches the criminal rate. Overlooking the borrower's personal covenant and any guarantees when the property sells for less than the debt. Granting a second mortgage without the first mortgagee's consent where the first mortgage requires it.