Form 9D and 9E

This Form is indicated at section 24 of By-law 9. This guide is not intended as legal advice.

According to By-law 9, lawyers in Ontario working with lenders in real estate transactions have specific rules to follow, which include the use of Form 9D for investment authority and Form 9E for reporting on the investment. There are also circumstances where these forms are not required.

The LSO has an FAQ page about these two forms.

We have summarized the key rules and responsibilities in By-law 9 regarding these forms as follows:

Record Keeping (Subsection 1):

Lawyers must keep files for each financial interest (charge) in real estate. Each file should contain:

• A signed investment authority (Form 9D), which lenders sign before the first loan advance.

• A completed investment report (Form 9E).

• An original declaration of trust (if the charge isn't held in all lenders' names).

• A copy of the registered charge.

• Any documents provided by the lender.

Exceptions (Subsection 2):

Certain lenders, like banks or insurers, don't require the use of investment authority (Form 9D) and investment report (Form 9E) if they meet specific criteria. These exceptions apply when:

• The lender belongs to specific categories, like banks or insurers, and has entered a loan agreement with the borrower, provided written commitment terms, and shared a copy of that commitment with the lawyer.

• There's a close relationship between the lender and borrower.

• The borrower is an employee of the lender or a related corporate entity.

• The lender has executed the Investor/Lender Disclosure Statement and instructed the lawyer to accept it as proof of the loan agreement.

• The loan amount doesn't exceed $6,000.

• The lender is selling real property to the borrower, and the charge is part of the purchase price.

Providing Documents to Lender (Subsection 3):

Following the first loan advance, lawyers must promptly give each lender:

• An original of the investment report mentioned in clause (1)(b).

• A copy of the declaration of trust if the charge isn't held in all lenders' names (clause 1(c)).

Updating the File (Subsection 4):

Whenever specific actions related to the loan occur, lawyers must add to the file:

• A new investment authority (Form 9D), signed by each lender.

• A new investment report (Form 9E).

Acts Covered (Subsection 5):

Subsection (4) applies when these actions occur:

1. Changing the charge's priority, reducing the security available.

2. Changing another charge of higher priority, reducing the security available to the lender's charge.

3. Releasing collateral or other security held for the loan.

4. Releasing a person liable under a covenant related to the loan.

New Report Requirement (Subsection 6):

After creating a new investment report (Form 9E) under subsection (4), lawyers must deliver an original of it to each lender.

Substitution Requirement (Subsection 7):

If lawyers substitute another security or financial instrument for the charge, they must include the lender's written consent in the file before making the substitution.

Exceptions (Subsection 8):

Lawyers don't need to follow subsection (4) or (7) for certain lenders if specific exceptions in clauses (2)(a), (b), (c), (e), or (f) applied when the loan was first made.

In summary, Form 9D and Form 9E are used for record-keeping in real estate deals with lenders in Ontario. Lawyers have specific duties, including providing documents and updating files when certain actions happen during the transaction. The exceptions apply when lenders meet specific criteria outlined in the law.