Get Your Priorities Straight

For lending institutions, few things can interfere with the priority of a first-ranking mortgage - construction liens and writs of execution are familiar examples. Typically, though, these can be identified and remedied by conducting a simple title search. Lenders are more vulnerable in circumstances where these obstacles are less obvious, and sometimes deliberately hidden by dishonest borrowers.

A super priority lien is a type of statutory lien that gives governmental bodies priority over registered mortgages. When a particular section of a statute¹ is triggered, a "deemed trust" is created by operation of law. What does this mean? Where the borrower has fully repaid the mortgage loan, the lender essentially holds the proceeds "in trust" for the government. This allows the government to collect from the lender amounts owing by borrowers for such things as unremitted HST and other source deductions.