Mortgage Priority and Registration: The Broker-to-Lawyer Interface

The broker should communicate the lender's intended security position exactly as approved: first, second, collateral behind a specified charge, pari passu if expressly structured, or another agreed position. Counsel then reviews title and determines what registrations, discharges, postponements or other legal steps are required to deliver that result.

This wording matters. Saying 'the lender requires first position' accurately transmits a credit condition. Saying 'the lender will be first on title' before counsel has reviewed the title can improperly convert an expectation into a legal assertion.

The mortgage application often contains an imperfect but useful debt map: current first mortgage, secured line of credit, second mortgage, private charge, vendor take-back, tax arrears or other secured obligations. The broker should send that map and identify which obligations the new lender expects to be discharged, reduced, postponed or left in place.

Counsel's title search may reveal something different. When it does, the discrepancy should return to the brokerage/lender because the credit decision may have been based on the wrong encumbrance picture. The lawyer should not have to guess whether an unexpected charge is acceptable to the lender.

Where an existing charge is expected to remain but rank behind the new mortgage, the brokerage should identify the mortgagee, account/loan details available, intended continuing balance and lender condition requiring postponement. It should also avoid promising that the existing creditor will agree until that agreement is actually obtained.

If the existing charge is a revolving facility, readvanceable mortgage or other security whose registered amount differs from its current balance, the broker should not assume the current balance answers the priority question. Counsel and lenders need the actual legal/security arrangement.

Some mortgage products or lender instructions may provide for a registered charge amount that differs from the initial funds advanced. The brokerage should avoid describing that difference as an error without reviewing the actual lender instruction. Conversely, if a private lender intended a conventional fixed advance and the legal instruction appears inconsistent with the commitment, the mismatch should be reconciled before registration.

The broker's role is to ensure counsel has the lender's current instruction and that the borrower has received the required mortgage disclosures. Counsel handles registration particulars and legal explanation within the retainer.

Ontario's Construction Act contains mortgage/lien priority rules that can affect construction financing and subsequent advances. Other legal interests may also require counsel's analysis. The mortgage professional should therefore resist the simplistic assumption that a title printout alone settles every priority issue.

What the brokerage can control is data quality: identify the lender's required position, existing obligations known from underwriting, intended payouts/postponements, whether construction has started, and any known dispute or lien information. Then let counsel provide the legal analysis.