The Mortgage Instructions Toolkit provides practical guidance for lawyers responding to lender requests in residential real estate transactions. This page addresses issues when a lender requires a lawyer to sign certain undertakings.  

The situation

Mortgage lender instructions may require a lawyer to provide a signed undertaking. The lender may also ask for an undertaking after a discussion or following a request that is not included in the original instructions.

Undertakings that relate to facts known to the lawyer are within the lawyer’s scope. When a lawyer signs an undertaking that goes beyond these facts or personal knowledge, the lawyer is offering an unsubstantiated legal opinion with all the inherent consequences.

Codes of professional conduct across the country require a lawyer to give only undertakings that the lawyer can fulfill and to honour these undertakings. The Federation of Canadian Law Societies’ Model Code of Professional Conduct (2017) under the title “Undertakings and Trust Conditions” reads as follows:

7.2-11 A lawyer must not give an undertaking that cannot be fulfilled and must fulfill every undertaking given and honour every trust condition once accepted.

Commentary

 [1] Undertakings should be written or confirmed in writing and should be absolutely unambiguous in their terms. If a lawyer giving an undertaking does not intend to accept personal responsibility, this should be stated clearly in the undertaking itself. In the absence of such a statement, the person to whom the undertaking is given is entitled to expect that the lawyer giving it will honour it personally. The use of such words as “on behalf of my client” or “on behalf of the vendor” does not relieve the lawyer giving the undertaking of personal responsibility.

Sample lender instructions

Lawyer asked to sign as follows:

In consideration of and notwithstanding the closing of the above-noted transaction, I hereby undertake as follows:

1. To confirm the applicant(s) identification is legitimate and matches the Information provided in the commitment.

2. I confirm that the subject Agreement of Purchase and Sale is a bona fide sale/purchase agreement.

3. I confirm that the subject property will be vacant upon possession.

4. I confirm that the vendors are in fact the registered owners on title to the subject property being mortgaged and that the vendors appearing on the Offer to Purchase provided to (the lender) matches title registration of the property along with length of time current owners have been registered on title.

Practice guidance

• Give copies of documents without confirming that the information in a document matches the information in a document that you have not seen, such as the commitment.
• Use specific language to describe the facts known to you and the source of the information upon which you are basing your signature on the undertaking.

For example:

The Agreement of Purchase and Sale says, in section “x”, that the purchaser will receive vacant possession on “y” date.

Or,

Purchasers “x” reported to me on “y” date that they inspected the property at the above address on “z” date and it was empty of people and moveable property.

• Decline to sign any undertaking that is outside your professional capacity or outside your area of knowledge or expertise.  Make sure to qualify any assurances you give to remain within the scope of your professional competence. See also the topic Responsibility to “ensure” or “certify”.

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