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Many homeowners (“mortgagors”) focus on one goal: paying off their mortgage (also known as a “charge”) so they can finally enjoy full and clear title to their property. Although paying off the loan is the toughest battle, it does not, on its own, remove the mortgage from title. There are several steps that must be taken to remove the charge, depending on the mortgage agreement and the lender (“mortgagee”).
Whether a homeowner has paid off the loan, is refinancing, or is preparing to sell, the charge must be properly discharged to ensure title is clean and marketable and to avoid delays, added costs, and closing complications. There are several mechanisms to discharge a mortgage, as outlined below.
1) By way of a Discharge of Charge:
The most common way to remove a mortgage from title is through a registered Discharge of Charge.
Defeasance Clauses:
Mortgage agreements often contain defeasance clauses, which state that upon payment in full, the mortgagee’s interest in the property is cancelled. Where such a clause exists, and the lender registers the discharge, the process is relatively seamless for the homeowner. This clause operates as a “legal trigger”, extinguishing the lender’s rights upon repayment and confirming the borrower’s entitlement to a discharge. However, even where a defeasance clause exists, a discharge must still be registered on title to formally remove the encumbrance.
The process for discharging a mortgage will differ based on the identity of the lender.
Institutional Lenders/Mortgagees:
If the mortgagee is a major financial institution, such as TD Bank, RBC, or Scotiabank, the process is streamlined. Typically, the lender will register the discharge of the mortgage on behalf of the homeowner once there is confirmation that the entirety of the mortgage has been paid off.
Private Lenders:
For private or smaller lenders, the process is not as straightforward for the mortgagor. The homeowner must complete the process themselves, requesting a “Discharge of Charge” document from the lender. This document confirms that the mortgage has been paid in full, which is necessary in order for the Land Titles Office to discharge the mortgage registered to the property.
This relatively simple process gets more complex in situations where the lender unreasonably withholds their consent to discharge; the lender has died or cannot be found; the lender corporation has dissolved; or where the mortgage is decades old, and documentation is incomplete. In these situations, if the Discharge of Charge document cannot be obtained, the homeowner requires court intervention to complete the process.
2) By way of Obtaining an Order to Discharge the Mortgage:
Where a Discharge of Charge document cannot be obtained, relief is available to mortgagors under Ontario’s Mortgages Act, depending on the specific complexity the homeowner is facing.
(A) If the Mortgage Has Been Paid In Full:
If the homeowner has already paid off the mortgage, section 12(8) of the Mortgages Act allows the court to order the discharge where it is proven that, first, the loan has been paid; and second, that a discharge cannot be otherwise obtained without undue delay or expense.
This remedy is available in situations where the lender is deceased, cannot be located, where a corporate lender has been dissolved or lacks accessible records, or where the lender refuses or fails to respond.
If a homeowner pursues this process, they must be prepared to file evidence demonstrating two key elements: first, why a discharge cannot be obtained directly from the lender; and second, that the mortgage has, in fact, been fully satisfied. Evidence addressing the first requirement may include a death certificate, corporate dissolution records, or documentation outlining the reasonable steps taken to locate the lender. Evidence of repayment may consist of bank statements, cancelled cheques, written confirmations, payout statements, or accounting records.
Once satisfied, the court will grant an order discharging the mortgage, which can then be registered on title to remove the encumbrance.
(B) If the Mortgage Has NOT Been Paid in Full:
In cases where the lender cannot be found, and there are outstanding amounts on the mortgage, section 12(3) of the Mortgages Act kicks in to prevent undue delay by allowing the borrower to pay the outstanding repayments into court.
If there is uncertainty surrounding the outstanding amount left to be paid on the mortgage, the court can require the borrower to pay a higher amount into court before granting the order. Any extra money paid in will remain with the court until a judge decides who is entitled to it.
After the mortgage loan funds are paid into court in full, the court has the authority to enable the discharge of the mortgage notwithstanding the lender’s absence. The purpose of this process is to provide relief to a mortgagor who is entitled to repay the mortgage debt and obtain a discharge, but is prevented from doing so for reasons outside of their control.
(C) If Mortgage Payments Have Not Been Made in Over 10 Years:
Even if a mortgage is decades old, it does not automatically “expire” or disappear from title. However, in this situation, relief may be available to a mortgagor under Ontario’s Real Property Limitations Act. Section 43 provides that where more than 10 years have passed since the cause of action arose, typically marked by the date of the last payment, written acknowledgement of the debt, or the transfer of the borrower’s interest in the property, the lender cannot commence an action to recover the mortgage debt.
The purpose of this limitation is to prevent stale, forgotten, or abandoned mortgage claims from lingering indefinitely over a borrower’s head. Instead, the limitation promotes finality and certainty in property ownership. Importantly, the expiry of the limitation period does not automatically remove the mortgage from title. If the lender does not cooperate, the borrower must still obtain a court order to discharge the mortgage, as outlined above.
Final Takeaway
Although paying off a mortgage is a significant financial milestone, it is not the final legal step. Until a Discharge of Charge (or court order) is registered on title, the mortgage remains an encumbrance on the property. Depending on the circumstances, statutory remedies may be available; however, these remedies typically require a formal court application supported by proper evidence.
Property owners seeking to discharge a mortgage who require guidance through the legal process are encouraged to consult with our experienced counsel.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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