On several occasions during the past year, our office has been involved in matters associated with undischarged mortgages. Certain of these mortgages had improperly remained on title for a period of at least 10-15 years.
After the completion of a real estate transaction, it is extremely important for the Vendor's lawyer to diarize his or her undertaking(s) to discharge all mortgages (and related security). It is also important for the purchaser's lawyer to diarize undertakings that are received, in order to follow up and to ensure that the mortgage is discharged properly.
The longer a mortgage that should be discharged remains on title, the larger the problem becomes.
Mortgages can remain on title for a number of reasons: for example, there may be an error in the lending institution's name, a technical issue with the Land Registrar's office, or the vendor's lawyer has failed to register a discharge.
When it comes time for the owner of a home to refinance, or if the owner wants to sell the property, an undischarged mortgage clutters title and may be difficult, costly and time consuming to discharge. Purchasers should be made aware of encumbrances that are being left on title after the property is transferred to them, so that they can follow up to ensure that a discharge is registered. Empowering clients with this knowledge will put their mind at ease and help them understand the mortgage process.