Section 24

Record keeping requirements when acting for lender

24. (1) Every licensee who acts for or receives money from a lender shall, in addition to maintaining the financial records required under sections 18 and 20, maintain a file for each charge, containing, (a) a completed investment authority, signed by each lender before the first advance of money to or on behalf of the borrower; (b) a copy of a completed report on the investment; (c) if the charge is not held in the name of all the lenders, an original declaration of trust; (d) a copy of the registered charge; and (e) any supporting documents supplied by the lender.

Exceptions

(2) Clauses (1) (a) and (b) do not apply with respect to a lender if, (a) the lender, (i) is a bank listed in Schedule I or II to the Bank Act (Canada), a licensed insurer, a registered loan or trust corporation, a subsidiary of any of them, a pension fund, or any other entity that lends money in the ordinary course of its business, (ii) has entered a loan agreement with the borrower and has signed a written commitment setting out the terms of the prospective charge, and (iii) has given the licensee a copy of the written commitment before the advance of money to or on behalf of the borrower; (b) the lender and borrower are not at arm’s length; (c) the borrower is an employee of the lender or of a corporate entity related to the lender; (d) the lender has executed the Investor/Lender Disclosure Statement for Brokered Transactions, approved by the Chief Executive Officer under subsection 54 (1) of the Mortgage Brokerages, Lenders and Administrators Act, 2006, and has given the licensee written instructions, relating to the particular transaction, to accept the executed disclosure statement as proof of the loan agreement; (e) the total amount advanced by the lender does not exceed $6,000; or (f) the lender is selling real property to the borrower and the charge represents part of the purchase price.

Requirement to provide documents to lender

(3) Forthwith after the first advance of money to or on behalf of the borrower, the licensee shall deliver to each lender, (a) if clause (1) (b) applies, an original of the report referred to therein; and (b) if clause (1) (c) applies, a copy of the declaration of trust.

Requirement to add to file maintained under subs. (1)

(4) Each time the licensee or any licensee of the same firm of licensees does an act described in subsection (5), the licensee shall add to the file maintained for the charge the investment authority referred to in clause (1) (a), completed anew and signed by each lender before the act is done, and a copy of the report on the investment referred to in clause (1) (b), also completed anew.

Application of subs. (4)

(5) Subsection (4) applies in respect of the following acts: 1. Making a change in the priority of the charge that results in a reduction of the amount of security available to it. 2. Making a change to another charge of higher priority that results in a reduction of the amount of security available to the lender’s charge. 3. Releasing collateral or other security held for the loan. 4. Releasing a person who is liable under a covenant with respect to an obligation in connection with the loan.

New requirement to provide documents to lender

(6) Forthwith after completing anew the report on the investment under subsection (4), the licensee shall deliver an original of it to each lender.

Requirement to add to file maintained under subs. (1): substitution

(7) Each time the licensee or any other licensee of the same firm of licensees substitutes for the charge another security or a financial instrument that is an acknowledgment of indebtedness, the licensee shall add to the file maintained for the charge the lender’s written consent to the substitution, obtained before the substitution is made.

Exceptions

(8) The licensee need not comply with subsection (4) or (7) with respect to a lender if clause (2) (a), (b), (c), (e) or (f) applied to the lender in the original loan transaction.

Investment authority: Form 9D

(9) The investment authority required under clause (1) (a) shall be in Form 9D.

Report on investment: Form 9E

(10) Subject to subsection (11), the report on the investment required under clause (1) (b) shall be in Form 9E.

Report on investment: alternative to Form 9E

(11) The report on the investment required under clause (1) (b) may be contained in a reporting letter addressed to the lender or lenders which answers every question on Form 9E.