The Every Lawyer

Exploring the Mortgage Instructions Toolkit

Episode Summary

Our guest today is Ray Leclair, vice president of public affairs at LawPRO, co-author of the Mortgage Instructions Toolkit.

Episode Notes

Our guest today is Ray Leclair, vice president of public affairs at LawPRO, co-author of the Mortgage Instructions Toolkit.

Click here to view The Mortgage Instructions Toolkit.

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Episode Transcription


Announcer: This is The Every Lawyer presented by the Canadian Bar Association.

Marlisse Silver-Sweeney: [Intro music] Welcome to The Every Lawyer, a Canadian Bar Association podcast. I’m your host. Marlisse Silver-Sweeney. Can you even have a conversation with friends these days without getting into the Canadian real estate market? I live in Vancouver a market that’s seen a 126% increase in home sales this March compared to last March. House prices in the Greater Toronto market have gone up 20% to 25% since COVID-19 hit, and home prices in Nova Scotia have hit record highs too. So needless to say mortgages are also a hot topic these days and we’re discussing the Mortgage Instruction Toolkit today on The Every Lawyer. It’s available on the CBA website under Publication and Resources and also under the description of this episode.

It serves to help all lawyers understand the intricacies of this area of real estate law. Our guest today is Ray Leclair. He currently serves as Vice President of Public Affairs at LAWPRO an insurance provider in Toronto. He was co‑author of the Toolkit. [Intro music] Ray thank you so much for being here today with us and taking the time to explain the major components of the Toolkit and its use for CBA members.

Ray Leclair: Thank you Marlisse for this opportunity. It’s wonderful to be able to promote the Toolkit. The Mortgage Instruction Toolkit was created for lawyers and we know that lawyers are using it but it’s always good to promote it some more.

Marlisse Silver-Sweeney: Awesome. So that’s perfect, it’s a great intro to my first question which is let’s talk about the Toolkit, can you give our audience a brief overview of this tool, so who is it meant to be serving and how can they use it?

Ray Leclair: Great question to start with. The Mortgage Instruction Toolkit was started because lawyers were receiving instructions form financial institutions that were beyond the scope that they could actually deal with. And it was an opportunity to try to address these issues and how do you present the subject. Up to now it’s been basically one individual lawyer writing to a bank to say, “This is improper” or “I can’t provide that” and we thought that there would be more strength if we had, that the CBA actually add its voice to the solution. And so now instead of a lawyer responding they can say, “The CBA recommends or suggests the following;” and so it’s one way to be able to elevate it.

The other thing is also bringing the issues to the lawyer’s attention. A lot of lawyers know the instructions but don’t know how to deal with it. So we wanted to raise that matter with lawyers to say “Yes we understand that you’re being asked to do things that you should not be doing or that you cannot do and this is way to deal with it” and so we put forward the suggestions. We also wanted to engage the bankers. We used to have historically a very good relationship between lawyers and bankers. There was very much a local relationship, the local bank manager and the local lawyer. They could agree and modify things and proceed on a mutual basis.

However for a number of reasons the bank centralized that function and the lawyers lost that avenue, that channel to be able to raise issues. And so we were hoping that by raising these issues that the banks would then provide us with a channel to be able to address some of this. And we’re very pleased to see that the banks did respond in exactly that way. Some have already changed some of the requirements and we’re hoping to continue that dialogue.

Marlisse Silver-Sweeney: Well thanks so much you’ve given us a really comprehensive overview and I have obviously a lot of follow-up questions but I wanted to start going back to the beginning of what you said there. You were talking about some problematic or improper requests from the lenders, can you give us an example, what does it mean and then how does the Toolkit help lawyers navigate these types of issues?

Ray Leclair: Yes so one of the, I guess one of my pet peeves is being requested to provide an opinion that the water is fit for human consumption. Of course we’re talking about rural property, there’s no municipal water, there’s a well or some other method of getting water and there’s often a requirement that the water be fit for drinking. But there’s a request for the lawyer to provide an opinion that it’s good and fit for human consumption. Well there is no such test. There are health units that will do tests of the water for certain contaminants that are found in the water and will give an opinion as to whether or not they’re in the range suitable for human consumption. But overall it’s a very minute number of contaminants they’re looking at and it’s definitely not a result that confirms that it’s fit for human consumption.

Marlisse Silver-Sweeney: Oh interesting.

Ray Leclair: And so we’ve advised lawyers that they should not be providing that kind of opinion, they’re not qualified to and they don’t have the back-up for doing so. What is being suggested by the Toolkit is that lawyers provide the certificate that’s provided by the health unit with that result that it has and indicated that [unintelligible 00:05:50] response that the lawyer is able to provide to the lender. And that typically is satisfactory and it is not an issue. But again a concern that, you know, a lawyer would be giving an opinion and later be sued on that opinion on the basis that they don’t have that ability.

Marlisse Silver-Sweeney: Right. Oh what an interesting example, OK. And can you talk me through how a lawyer would use the Toolkit in that instance, like what would they look up, what would their response be? You mentioned that the Toolkit, you know, sets and an appropriate response to that type of request but how does the lawyer actually access it?

Ray Leclair: The Toolkit is on the CBA website and basically you can go through the website or in fact you can Google CBA Mortgage Instructions Toolkit and it will pop up. I want to commend the CBA for making the Toolkit available to all real estate lawyers in Canada and not just members so it’s not behind the wall.

Marlisse Silver-Sweeney: Oh good to know. OK so for our audience, anyone can access this.

Ray Leclair: Yes anybody, any real estate lawyer can access it which is a great resource available to lawyers. And the Toolkit was created not as a book that you read from A to Z when you can’t sleep at night but instead more like a dictionary. If you have an issue then you to the Toolkit and you look up the issue. The topic there will be explained to some extent, there may be an example of what the request may be like in the mortgage instructions received from the lender. And then there’s a typically a solution or a suggestion by the Toolkit Committee to basically respond in a certain fashion or be weary of certain responses.

The Toolkit comprises presently I think is 36 different topics. They’re all set out in alphabetical order on the website, and you can simply on the main page click on the topic that you have an interest. It brings you to that page. And it’s typically very short, they’re not very long. Two or three pages would be the maximum length of a topic discussion, and have plenty information then for the lawyer to be able to put into a letter to the bank to say, you know, “Here’s the information I have or here’s what I can do.”

Marlisse Silver-Sweeney: Thanks for that comprehensive rundown I think that makes a lot of sense. I was actually going to ask you, you have us a rural example about water safety and so that’s great for lawyers practicing in probably more remote areas or people that are looking to buy recreational property. Can you give us an example now of something in more an urban setting that the Toolkit responds to, an issue that comes up that you’ve seen on the ground that the Toolkit is able to help with?

Ray Leclair: Absolutely. One of the ones that is often asked of lawyers is to confirm zoning and basically every property across Canada, and that’s one of the features of the Toolkit. This was not done by a committee of lawyers in a particular province. The numbers of lawyers ranged from throughout Canada and so we have that perspective in place that it’s not regionally centralized it’s very much reflective of the practice across Canada. And so in zoning you could be asked, you know, to provide compliance. Compliance could be in the setback requirements such as the minimum lot size and the frontage and the height of the buildings and the size of the yards etcetera. But it also could be in the use of the property whether it’s commercial, residential, industrial etcetera.

Some of that information is obtainable online by municipalities, some you have to get a report and so on, and so we go through the issue and then we provide two different responses; and the practice today is that title insurance is involved. Title insurance may cover some of these issues and so it’s a matter of if you have time insurance then there’s no opinion to be given because the lender will be relying on a title insurance policy. And so lawyers should be weary to make sure their opinion does not provide, or if they don’t provide an opinion on zoning if they have the policy.

They also need to look at the Mortgage Instructions to make sure that the lender is prepared to accept a title insurance policy on that issue. And so that’s one matter. And then we provide in a situation where there’s no title insurance and the information, you know, that the lawyer or how they should proceed to answer back the request.

Marlisse Silver-Sweeney: Right. Well it sounds like this Toolkit responds to a lot of pitfalls that real estate lawyers can find in their practice, so it sounds very useful in that way. I wanted to go back to something that you said earlier and that was around the issue between communication between banks and lawyers. I was wondering if you could expand on this, why is this so important to real estate practice and is there a way that the Toolkit helps navigate or respond to that issue?

Ray Leclair: Thank you. It does in two ways. First of all it’s very important because instructions come in and sometimes they’re not specifically geared to that client or that property and so they need to be modified, and so how do you modify it? A lawyer cannot do that on their own they have to seek instructions from the bank. And it had become more and more difficult to do so. As I said beforehand we used to call the local bank manager and say, “You’re requesting, you know this doesn’t apply here or you know about this situation” and the bank manager could waive it or could accept a suggestion of an alternative back from the lawyer.

That’s no longer as easy in that there’s a, and in fact the person you receive the instructions for typically doesn’t have the authority on behalf of the bank to make a change and so now you need to go up the line somewhere to get somebody who’s actually knowledgeable of the matter and the underwriting side and to have the authority to be able to make a change. So the Toolkit does provide a suggestion that, you know, you should be making those requests, you should be following-up. And it also has opened up the channel with the banks where we had no universal channel if you want.

There’s now been discussion between the Canadian Bankers Association and the Canadian Bar Association real estate lawyers to try to coordinate these things so that we can first of all avoid the instructions that are not as, or that aren’t available, that lawyers aren’t available to meet, but also to be able to ensure that they can be deal with on an individual basis also. And so that discussion has been opened and in fact our phase two we’re actually hoping to progress with more discussion going forward.

Marlisse Silver-Sweeney: OK and so you mean phase two of advocacy between the CBA Real Estate Association and the Canadian Bankers Association or phase two in the Toolkit?

Ray Leclair: Actually phase two in the Toolkit.

Marlisse Silver-Sweeney: Oh OK.

Ray Leclair: So phase one was putting together these topics and we went through a year I think of coordination to come up with the 36 topics and put them out. And then that was kind of a generic let’s look across the board and see if there’s different things in place. And we went back to the bankers and said, “Here’s what we found.” And of course they see our toolkit on the website also because it’s not behind the wall, so they can see what the issues are; and some have addressed them. And then when we asked for them to address they then came back and requested that we individual go through their instructions to be able to highlight to the individual banks because not everyone has the same issues.

And so the second phase is exactly that. It is we have a second group of individuals who are now looking at the individual instructions from lenders to be able to highlight for that specific lender matters that would be of concern that we want to discuss and that we could proceed with. Now out of the first phase we had approached them and we have an outstanding request or five outstanding requests if you want from banks. One is version control. Lawyers tell us that they receive instructions. They will receive one fax a day, a second fax the second day and maybe a third fax the next day, or they’ll get a copy by email or now on the platforms that are out there. The problem with it of course is when the lawyer receives them you don’t know if there’s been any change because there’s no version control.

So you don’t know if it’s a duplicate or if something that’s been changed. So we’ve asked the banks if they would consider adding a version control to their instructions so that when they’re received if you get a second copy you can quickly confirm that what the case is, because sometimes these instructions can be fairly lengthy and small print and very difficult to be able to identify a specific change. The second request we have for them is a section for particular requests. Most of the instructions are standard requests that you do you every transaction but very often a transaction will have something that’s particular to that client, particular to that transaction, particular to that property.

And unfortunately sometimes it’s just hidden in the rest of the small print and so we’ve asked if they would consider again putting in a special section where these particular requests could be so they could be easily identified to make sure that the lawyer does cover it for the lender so it’s their advantage. And to make sure that the lawyer knows about it early enough so that they can attract, tend to it as soon as possible.

Marlisse Silver-Sweeney: Well it sounds like these, and maybe let’s not talk about all five right now and I’m sure our audience can go to the Toolkit and see them, but it sounds like these issues and version two of the Toolkit is going to be even more useful for your audience. When can we expect it out, when is version two being released?

Ray Leclair: Well it’s not necessarily a release that we will have in that I don’t think there’s be anything added to the Toolkit, although it could be also if we find another topic that we haven’t discussion. But the importance of part two is further to dialogue with the banks –

Marlisse Silver-Sweeney: Got you.

Ray Leclair: – and with the financial institutions, and hopefully from that dialogue there will be some changes to instructions so that some of these concerning provisions would no longer be there will be addressed in a way that makes it easier for everybody.

Marlisse Silver-Sweeney: Right. Well it’s a multipurpose toolkit then. I wanted to ask you how non-real estate lawyers can use this tool, is there any use for them in it?

Ray Leclair: Well I guess to the extent that they have clients who have real estate and, you know, may have some questions. They could look up and see the types of issues that are encountered. But typically again this would be specific to real estate lawyers and probably best left to, you know, the ones who specialize in that area. We’re always concerned about dabblers, people who are into a field that they don’t regularly do whether it be real estate, criminal law, civil law or whatever. There is a concern that somebody takes on a task that they’re not used to; and so this probably more specific for real estate lawyers.

Marlisse Silver-Sweeney: OK that makes sense. And you’re a busy person so I don’t want to take up too much more of your time but the final question is a little amorphous but do you see the Mortgage Toolkit as a living document and what’s in its future?

Ray Leclair: Very good question, thank you. Yes and it was meant to be exactly that. It was meant to be a document that could be added to or changed as things progressed. There is a constant call out to all Canadian real estate lawyers that have any issue with the financial institution to raise it with the CBA so that we can look at whether or not we need to add another topic. The 36 topics are not set in stone and we are always looking for a new topic and from time to time a new issue will come up. And we are actually considering maybe adding a couple that have been raised lately. And we’re also looking to see, you know, if there’s a change, that’s one the things.

I mean if the banks, the financial institutions all change their instructions and get rid of a specific requirement we may very well drop that topic from the Toolkit. But I think more importantly what it is does is engage a discussion between lawyers and bankers. And I think, of the past I think that’s the greatest loss that we have suffered is the communication channels that were so available prior and so easy to follow have become a little more difficult and a little more streamlined. And hopefully this does reopen that channel and gives us an opportunity to have regular discussions about issues.

And it goes both ways. I mean I’m sure that the banks are complaining about lawyers about certain issues and we have raised that with them also to say, you know, “If there’s something that you want us to pass the message on, we want this to be a two-way communication.” And so we’re very open to continuing on this and to keep the Toolkit alive for exactly that purpose, to ensure that we cover new things that come about but also to maintain discussion.

Marlisse Silver-Sweeney: Right, so it’s a toolkit and it’s a means of communication between bankers, lenders and lawyers. Well Ray thank you so much again for taking the time to explain and to give us examples, we really appreciate it.

Ray Leclair: Thank you very much for the opportunity to be able to promote the Toolkit, I think it’s a great resource, you know, I may be bias in that I worked on it but with others, but I think every lawyer should go and Google it, CBA Mortgage Instructions Toolkit. Go take a look at the topics that are there. Send us your comments, send us your suggestions, we look forward to getting them. And the real property section of the CBA is very proud of this initiative that was started and is ongoing.

Marlisse Silver-Sweeney: [Intro music] What a topical discussion. Thanks to Ray for explaining the ins and outs of this area. If you want to learn more the Toolkit can be accessed through the CBA website under the Publications and Resources section and also the episode description of this podcast. We’d be interested in hearing your own experiences with real estate law and your thoughts on the Toolkit. Tweet to us @CBA_News or you can reach me at my handle @MarlisseSS. We are on Spotify, Apple Podcast, and Stitcher, wherever you listen to podcasts. Subscribe to receive notifications for new episodes and leave us a review. We also have a podcast in French called Juriste branché. Thanks for listening. Stay tuned for the next episode.