Private Mortgage Closing Guide: The Broker-to-Lawyer Handoff

A real estate lawyer already understands the legal work required to close and register a mortgage. The mortgage brokerage should not attempt to restate the lawyer's professional obligations, interpret title law for counsel, or prescribe how counsel should satisfy Law Society requirements. Our job is narrower: make sure the legal file arrives with the commercial and underwriting facts organized well enough that counsel is not forced to reconstruct the mortgage transaction from scattered emails.

Private mortgages make that handoff more important because the lender may be an individual, corporation, mortgage investment entity or other non-bank source; fees may be deducted from advance; an existing mortgage may be paid out or postponed; ILA or separate representation may be required; and the commitment can contain bespoke conditions. A clean handoff identifies those facts before instructions are issued and promptly flags any material change afterward.

The legal package should allow counsel to identify the transaction at a glance: borrower and registered-owner names as known to the brokerage, property, loan amount, term, interest rate, payment structure, maturity, lender identity, broker/lender fees, intended mortgage position, proposed closing date, payout targets, and any known title or ownership change. If funds are being directed to debts, tax arrears, construction, a vendor, another lawyer or other third party, the intended funds flow should be stated rather than left implicit.

The package should also distinguish facts from conditions. For example, 'existing first mortgage to be discharged' is different from 'lender requires first position'; 'borrower says spouse is not on title' is different from a legal conclusion about spousal rights. The broker should identify what has been represented to the lender and what the lender has conditioned upon, while counsel determines the legal effect.

FSRA's disclosure framework requires brokerages to make prescribed disclosures to private lenders and to disclose the brokerage's relationship with lenders to borrowers. The legal file should therefore not be the first place the identity or role of the actual lender becomes clear. If the lender changes after commitment, if multiple lenders are participating, or if an administrator will receive payments after closing, the brokerage should surface that immediately and re-check its own disclosure obligations before asking counsel to proceed.

Where counsel needs direct instructions from the lender, the brokerage should facilitate a direct and auditable instruction channel rather than acting as if the broker can give legal instructions on the lender's behalf. A broker may coordinate; the broker is not the lender's solicitor and should not blur that role.

Private mortgage terms can move quickly. A change in loan amount, lender fee, interest reserve, prepaid interest, mortgage position, payout amount, closing date, lender identity, borrower, guarantor or use of proceeds can affect disclosures, instructions, funds required and legal documents. The brokerage should maintain one current transaction summary and issue a conspicuous change notice when a material term changes rather than expecting counsel to compare email chains.

The lawyer should not have to guess whether a new lender spreadsheet supersedes the executed commitment. If the economics have changed, the brokerage should confirm the new commercial terms with the lender and borrower, complete any required mortgage-brokerage disclosure work, and then send counsel a clean updated package.

After closing, the brokerage needs enough information to complete its own file accurately: whether the mortgage funded, the funded amount if different, the closing date, whether an expected discharge/postponement was completed or remains outstanding, and any post-closing issue that affects the lender or borrower relationship. The broker does not need the lawyer's entire file.

This creates a clean division of records. Counsel maintains the legal closing record and fulfills legal reporting obligations; the brokerage maintains the mortgage suitability, disclosure, lender and transaction record. The two records should agree on the essential economics and outcome.