A frequently encountered issue faced by many lenders in mortgage
backed loan transactions is the use by the borrower of a nominee
title holder, or bare trustee.
What is a Nominee and Why are They Used?
A nominee is an entity (usually a corporation) who holds
registered legal title to a property while an off title entity
(often a limited partnership or real estate investment trust) holds
the beneficial title. The existence of a nominee divides the
ownership interest in the subject property. While legal title is
held by the nominee, the beneficiary receives (as the name implies)
the benefits of ownership.
Nominees are used for a variety of reasons, including creditor
protection, where the beneficiary cannot hold registered legal
title to the property under applicable Provincial law, or where it
is preferable to have a corporation hold the title to simplify day
to day transactions in respect of the property.
