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ARTICLE · 30 SEPTEMBER 2013

When Can A Second Mortgagee Sell A Property In Ontario?

Gowling WLG
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A recent decision by the Ontario Court of Appeal in "Business Development Bank of Canada v. Pine Tree Resorts Inc." illustrates the extent of exposure which a second mortgagee could potentially face when it attempts to enforce its second mortgage.

CanadaFinance and Banking
Rosa Lupo
Rosa Lupo
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A recent decision by the Ontario Court of Appeal in Business Development Bank of Canada v. Pine Tree Resorts Inc.1 illustrates the extent of exposure which a second mortgagee could potentially face when it attempts to enforce its second mortgage.

In Pine Tree, the mortgagor defaulted on a first mortgage in favour of Business Development Bank of Canada ("BDC") and also defaulted on a second mortgage in favour of Romspen Investment Corporation ("Romspen") with respect to an inn located in Honey Harbour, Ontario. At the time of enforcement, BDC was owed approximately $2.6 million. Romspen was owed approximately $4.3 million.

In addition to amounts owing to BDC, the mortgagor was also in arrears of approximately $250,000 for HST. Non-payment of HST was a breach of a covenant under the BDC security.

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