The Mortgage Instructions Toolkit provides practical guidance for lawyers responding to lender requests in residential real estate transactions. This page addresses the order of priority of the mortgage.

The situation

A lender’s instructions tell the borrower’s lawyer what priority the mortgage must have - usually a first mortgage.

It is therefore the lawyer’s obligation to ensure no other liens, mortgages, or other claims would take priority over the lender.

Sample lender instructions

You will also ensure that the Mortgage has been registered or filed in the proper Land Registry, Land Titles Office, or other appropriate public registry and constitutes a valid, enforceable and subsisting mortgage and charge again the Mortgaged Property with the priority described in the Loan Agreement subject only to the Permitted Encumbrances.

Practice guidance

• Consider other potential creditors and ensure they do not have priority. For example, municipal taxes, condominium fees, construction liens, amounts owing to governments, or other liabilities.
• Review the property title and other circumstances to confirm that the lender can obtain the priority requested.
• Follow up on prior institutional mortgages to confirm they have been discharged. Monitor undertakings to discharge to ensure they are satisfied promptly.
• Register the discharge for a private mortgage on closing.
• Verify title insurance protections for the lender and purchaser, when title insurance is to be put in place.