To the contentment of lenders and owners of commercial
properties, a long-awaited amendment involving section 10 of the
Interest Act (Canada) (the "Act") has just been
made. Indeed, on October 20, 2011, the Canadian government adopted
the Prescribed Entities and Classes of Mortgages and Hypothecs
Regulations. These regulations define the entities that will
be eligible for the purposes of applying paragraph 10(2)(b) of the
Act.
A brief historical reminder is called for Paragraph 10(1) of the
Act, passed in 1890, provided that borrowers could repay their
loans secured by hypothecs on immovables after five (5) years, even
if the hypothec was a closed hypothec for a longer term, subject to
paying a penalty equal to three (3) months' interest. At that
time, Parliament wished to protect individuals by means of this
provision, in particular farmers. Later, to encourage commerce,
particularly the railway companies attempting to structure their
long-term debts, Parliament
