How to Read and Understand a Form B Mortgage

This month’s newsletter features a clear explanation of the Form B mortgage, the foundational document for every mortgage registered in the BC Land Title & Survey Authority. 

There’s so much information packed into the Form B mortgage, much in cryptic legalese. I’ve translated the document into plain English, with an anonymized example of a real mortgage. This newsletter features:

• What is a Form B mortgage?

• Plain English Explanation of the Form B Mortgage 

• When the Form B May Not Tell the Whole Story 

What is a Form B mortgage?

In BC’s Torrens system, a Form B mortgage is the registration that secures repayment of a loan using real property as collateral. Once registered with the Land Title Office, it becomes a legal encumbrance, known to the public, giving the lender a claim against the property until it’s discharged. When a Form B mortgage is registered on title, the property cannot be sold without either consent of the lender, or a discharge.  

Below is an anonymized example of a recent Form B Mortgage we registered, so you know what they look like:

Note: a Form B mortgage is not to be confused with the Strata Form B information certificate! They are completely different things with a coincidentally similar name.

Plain English Explanation of the Form B Mortgage 

Here’s a plain English explanation of the 12 numbered sections you’ll find on every Form B mortgage: 

1. Application – This section identifies the lawyer or notary who filed the Form B, who is not necessarily the same as the lawyer or notary who witnessed the signature.

2. Description of Land – This includes the Parcel Identifier (PID) and the full legal description of the property being mortgaged.

3. Borrower(s) / Mortgagor(s) – Lists the name, address, and occupation of each borrower.

4. Lender(s) / (Mortgagee(s) – Lists the name and address of each lender, which is typically the financial institution providing the mortgage funds. 

5. Payment Provisions – Details the key payment terms, including: 

   • Principal Amount: The amount borrowed, which is the initial loan amount provided by the lender. 

   • Interest Rate: The rate at which interest will accrue on the principal amount. 

   • Interest Adjustment Date: The date on which interest begins to accumulate on the principal amount, usually before regular payments start. 

   • Interest Calculation Period: Specifies how often interest is calculated, such as semi-annually. 

   • Payment Dates: The scheduled dates for regular payments, which might be monthly, bi-weekly, etc. 

   • First Payment Date: Indicates when the borrower must make their first payment. 

   • Amount of Each Periodic Payment: The specific amount that must be paid at each interval. 

   • Interest Act (Canada) Statement: Indicates the equivalent interest rate calculated on a half-yearly basis, ensuring compliance with federal regulations.

   • Last Payment Date: The final date when the last scheduled payment is due. 

   • Assignment of Rents: If included, this allows the lender to collect rent from tenants directly if the borrower defaults on the mortgage. 

   • Place of Payment: Where the borrower must send each payment, usually specified as the lender’s address. 

   • Balance Due Date: The date by which the entire remaining principal must be paid in full. 

6. Mortgage Contains Floating Charge on Land? – Indicates if the mortgage includes a floating charge, which only attaches to specific assets upon a triggering event, providing flexibility in collateral. 

7. Mortgage Secures a Current or Running Account? – Specifies if the mortgage is tied to a running account, like a line of credit, allowing funds to be borrowed, repaid, and borrowed again.

8. Interest Mortgaged – Defines the type of interest being mortgaged, such as fee simple ownership or a leasehold interest. This clarifies the rights being offered as collateral. 

9. Mortgage Terms – Indicates whether the mortgage includes Prescribed Standard Mortgage Terms, the Lender’s Filed Standard Mortgage Terms, or custom terms through an attached schedule.

10. Additional or Modified Terms – Details any additional or modified terms beyond the standard mortgage terms, tailored to the specific agreement. These may include unique clauses relevant to the transaction, and may appear on pages a schedule.

11. Prior Encumbrances Permitted by Lender – Lists any existing financial charges or encumbrances on the title that the lender has agreed to allow to remain. For instance, if there is an existing mortgage in first priority, this section would acknowledge it. 

12. Execution(s) – Includes the signature of the borrower(s) and witnessing officers. Notably, the lender does not sign the Form B. This section also certifies that the document complies with the requirements for registration. 

Bonus Tip: looking for a payout statement or discharge for a mortgage, but unsure who to contact? Start is the lawyer listed in Section 1 “Application” . Usually, the lender’s lawyer prepares the Form B mortgage, and files it. The borrower’s lawyer has the borrower sign, so you’ll see their name as the witnessing offer in section 12.

When the Form B May Not Tell the Whole Story 

Many lenders, especially big banks, do not want to publicize the terms offered to their clients. These lenders can obfuscate the true nature of the mortgage by:

1. Writing “N/A” in key fields, and point to a private agreement, to keep the details of their deal private. The details will be signed by the borrower at the branch, or with their lawyer, and incorporated by reference within the Form B mortgage. For instance, the Form B may state monthly payments, but the mortgage agreement binds the borrower to bi-weekly payments.

2. Writing a much larger principal and higher interest rate, then referencing the “true” details by reference to the mortgage agreement signed by the borrower at the branch, or with their lawyer. Quite common for “collateral” mortgages.

3. Incorporating the terms of a commitment letter or other private agreement in section 9.

Further Information

1. LTSA Guidance on Form B Mortgages 

2. Prescribed Standard Mortgage Terms

🤔 Did You Know?

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