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ARTICLE · 29 OCTOBER 2021

Mortgage Lender Did Not Breach Duty Of Honest Contractual Performance

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A mortgage lender enforcing its rights under a mortgage may owe the borrower a duty to do so honestly and in good faith.

CanadaFinance and Banking
James R.G. Cook
James R.G. Cook
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A mortgage lender enforcing its rights under a mortgage may owe the borrower a duty to do so honestly and in good faith. However, this does not mean that a lender must refrain from taking steps that it is entitled to do to protect its interests even though the consequences to the borrower may be harsh.

In 2343680 Ontario Inc. v. Bazargan, 2021 ONSC 6752 (CanLII), the defendant borrowers were the owners of a large, single-family residence in an affluent neighbourhood in Whitchurch-Stouffville, Ontario. On December 8, 2017, they entered into a first mortgage with MCC Mortgage Holdings Inc. ("MCC") for $1,608,750, at 7.29% per annum, with monthly interest-only payments of $11,557.45.

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