By: Jayson Schwarz

First of all I would like to simply explain for those of you unfamiliar with the terms the way the process of real estate title works. The Government of Ontario keeps records of every piece of property in the Province. These records are called the title documents. The document on file, that says who owns the property is called the “transfer or deed”. All of these documents are filed with the government and this is called “registering” the document. When a bank lends money and gets a record of this loan on title the document is called the “mortgage”.  When the mortgage is paid off a new document is filed with the government office and it is called a “discharge”. If only part of the mortgage is paid off a document called a “partial discharge” can be filed and it releases that part referred to as paid off. There are many other documents but these are a good start.

Usually when a developer/builder starts the project he will go to a bank or other financial institution and just like you, arrange for a mortgage. The difference however is that this can be a huge mortgage. As an example the builder/developer may have a fifty or sixty million dollar “Blanket” mortgage put on to enable the builder/developer to create and build the project and it doesn’t matter if it is a house subdivision or a condominium project. The next thing that happens is that the house or condominium is built and sold and it is time for closing.

In the Agreement of Purchase and Sale will be a clause that will relate to the discharge of that part of the blanket mortgage that affects the property you are buying. The good builder lawyers put in the clause that the Purchaser will accept the promise (undertaking) of the builder’s lawyer to register the partial discharge in a reasonable period of time but will give on closing 2 important things: a) a letter (“discharge statement”) from the bank or other financial institution (“mortgagee”) setting out how much money has to be paid to the mortgagee to obtain the partial discharge and b) a direction from the builder to the purchaser telling the purchaser to pay the amount of money needed to obtain the partial discharge directly to the mortgagee.  The clauses I will NOT accept stop with the purchaser being forced to accept the builder or the builder’s lawyers undertaking to register a partial discharge without the other information.  

Now I do not believe the builder or the builder’s lawyers that do not put in a) or b) would give the promise without meaning it, but what about things out of their control . . .