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ARTICLE · 10 NOVEMBER 2022

Is Your Demand Loan Demandable?

Gardiner Roberts LLP
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A demand loan is a loan that a lender can require to be repaid by the borrower in full at any time.

CanadaFinance and Banking
Zev Zlotnick
Zev Zlotnick
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A demand loan is a loan that a lender can require to be repaid by the borrower in full at any time. A demand loan has no term, but is simply repayable on demand. They are codified through a commitment letter or promissory note or other underlying base loan document with ancillary security such as a mortgage, assignment of rents, general security agreement etc. Often, the borrower may prepay a demand loan all at once without prepayment penalties. To enforce a demand loan, a lender is required to issue a demand letter to those persons liable to pay under the mortgage loan before issuing a Notice of Sale under the Mortgages Act (Ontario). Section 42 of the Mortgages Act precludes the lender from commencing further enforcement proceedings during the demand period specified for repayment.

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