Expert Legal Support from Mortgage Refinancing and Private Lending Lawyers in Toronto

While A lenders usually offer the lowest interest rate, it is not always possible to refinance with them due to their income and other requirements.

In those situations, some borrowers will choose B lender, which are smaller banks like National Bank, Tangerine, and Home Trust. It is much harder for B lenders to trust their borrowers than A lenders, so they would require your lawyers submit 2 to 3 times more documents before giving you the money.

But there is good news – because they like to get your lawyers involved earlier on, you often have the chance to review your mortgage agreement with your lawyer before you sign on the dotted line.

While you still may not have much negotiating powers, you have more chances of backing out of the deal.

B lenders would also have more requirements on borrowers after closing. For example, they may require borrowers to submit evidence of property taxes and condo management fee payment on an annual basis. All of those terms should be reviewed in detail with your lawyer.

Before starting Varity Law, the founding lawyer Sabrina Ding worked exclusively with private lenders. She would help them structure deals, close refinances, and undertake enforcement when necessary.

Private lenders have the freedom of structuring each deal according to its specific needs, rather than follow a general template like A and B lenders. The lawyer’s involvement is crucial to ensure that the lenders are making secure investments to reliable borrowers.

Also, if all else fails, then the lender’s lawyer must know how to quickly undertake enforcement and sell the property to recover the lender’s losses.

Important concepts like loan to value, subsequent financing, spousal consent, and guarantors are key here. Book a 1st free consult with us to learn more.

If both A and B lenders do not work out, then some borrowers turn to private lenders. Those are private individuals or institutions who are the most relaxed about income and other requirements.

The good news is that private lenders would allow lawyers to get involved as early as possible – usually at the mortgage agreement (also called mortgage commitment) stage. The lender’s lawyer usually draft the mortgage commitment for the borrower’s lawyer review and signature with their client. The borrowers actually have more negotiating powers regarding the terms of the commitment.

This is typically the “reward” they get for agreeing to pay a higher interest rate to the private lenders, compared to A and B lenders.

Private lenders require the MOST number of documents from the borrower before funding. Also, usually borrowers only go to private lenders if they need money urgently. Thus, it’s imperative for the borrowers to find an experienced private lending lawyer who can provide those documents quickly, correctly, and completely.

Refinancing from the big 5 banks, being either TD, RBC, Scotiabank, CIBC, or BMO, are most common.

Whether you go to the bank directly or hire a mortgage broker, their main job is to get that mortgage approval for you. Few would actually sit down with you to go over all the mortgage terms that would apply to you in the next 1-30 years.

Unfortunately, you do not have much negotiating power when it comes to refinancing with A lenders. Most, if not all, borrowers would have already signed the mortgage agreement before coming to close the deal with us. Our advice is educate yourself with our free videos and blogs, and try your best to get us to review the agreement before signing.

If not, that’s okay. At closing, we would still tell you about important terms like prepayment penalties, future property sales, and subsequence financings. Knowing about those would help you govern your financing decisions in the coming decades, so you do not accidentally breach the mortgage contract. This prevents you from paying high interest penalties and service fees.

Our advice is also useful in doing long-term planning, so you can renew or end a mortgage agreement with the lowest fees possible. Our clients often end up paying $0 in prepayment interest!

For any estate value above $50,000, the executor must pay a 1.5% Estate Administration Tax on all values above $50k. This must be done within 180 days of receiving probate approval. Specifically, a detailed information statement must be filed with the Ministry of Finance and the taxes payable must be made into a bank draft to be delivered to the Court that approved the probate in the first place. Given the technicality of the two tasks, an estate lawyer is best equipped to handle them.

Also, the executor must file the deceased’s last year of income taxes, called terminal income taxes, with the accountant. This is a complicated filing, as all of the deceased’s assets are considered sold to the beneficiaries at fair market value. The lawyer executor should take reasonable steps to reduce income taxes payable, such as selling the deceased’s property in the estate’s name, in the year of the deceased’s passing, to qualify for the principal residence exemption (no taxes payable when the principal residence is sold).

Not wanting to deal with creditors is a top reason why many estate decided to hire a lawyer executor.

Unfortunately, many creditors have the power to sell off estate properties like real estate owned by the deceased, if their debt is not paid immediately after the deceased’s passing. If you read the fine print on many types of loan agreements, unfortunately “passing away” is considered one type of loan default that requires immediate and full repayment.

Lawyer executors are better equipped in dealing with creditors, as they see things like power of sale, lien registrations on a daily basis. They can better negotiate a reasonable timeline and a payout plan with creditors to reduce the chances of them selling off assets or incurring a huge amount of interest charges and service fees.

When there are one or more beneficiaries who are under 18 years old, then the application becomes much more difficult. Minors cannot legally own property or open bank accounts in only their names. At the same time, minors cannot consent to give up their inheritance, unlike adult beneficiaries. This creates a huge dilemma: the minor must receive their inheritance, and at the same time the inheritance cannot be put into their names.

There are two solutions to this problem. #1, and the more common solution, is for the Court to hold the minor’s inheritance (for free) until the minor becomes 18. However, the Court will not make any investments that have any risk, so at most they will invest the money in GICs. During this time, if the minor’s caretakers require assess to the inheritance to pay for the minor’s necessary expenses, such as education and medical bills, then they must apply to the Court each time they need money. The Court will be strict on assessing whether the expense is a necessity for the minor and whether the caretaker can afford to pay for that expense themselves without access to the minor’s inheritance.

The 2nd solution is to file a Guardianship application, which involves appointing an adult Guardian of Property for the minor. This is different from an estate trustee, who only needs to distribute the estate right away after probate is approved. The Guardian for Property must hold the property for as many years as it takes for the minor to become 18 years old.

While it seems that the Guardian are given more freedom when it comes to investment and spending on behalf of the minor, the Court will stringently analyze  a financial plan submitted by the Guardian regarding how they will manage the minor’s inheritance. The Court will not tolerate any at risk investments or unnecessary spendings. Also, the Guardian for Property is almost always required to buy a bond (costing 5% of the minor’s total inheritance) for every single year that they are managing the minor’s inheritance.

Probate with a valid Will is much easier than without a Will. Unfortunately, to date only 30% of our clients have a Will.

The key is on having a valid, or accurate Will. This means that the Will must satisfy 8 requirements. For more information, please visit our Estate Planning Page.

While some deficits can be fixed, like doing an Affidavit of Execution with one of the witnesses who signed on the Will, if he/she is still alive and accessible; other mistakes cannot be fixed, such as one of the witnesses being a beneficiary or spouse of a beneficiary.

The beneficiaries on the Will must be specifically named. Having vague phrases like my children is unhelpful because then the executor must locate all of the deceased’s children and the Court will likely require a bond insurance before issuing the approval (costing 5% of the entire estate value).

If there is a mistake that cannot be fixed, then a Probate Without Will application must be submitted instead.

Up to 70% of our probate clients do not have a valid Will. This means we must prepare and submit the much harder, Probate without a Will application.

When there is no Will, if the Court has any doubt that:

• There may be a conflict of interest between the executor and the beneficiaries;
• The executor does not have an exhaustive list of eligible beneficiaries (there may be missing beneficiaries);
• There are conflicts or disagreements between the beneficiaries;
• The executor is not credible or trustworthy

Then the Court will ask the executor to use his/her own money to buy a bond insurance, which usually costs 5% of the entire estate value.

When the deceased has no Will, the only people who may receive the inheritance are those related to the deceased by blood, adoption, or marriage, in order of priority.

For instance, if the deceased have spouse and children, then his/her parents, siblings, and other relatives would not be entitled to any inheritance or even notice that the probate application has been submitted.
Common-law partners are not eligible as beneficiaries, when there is no Will.

The person applying to become executor must provide details of the deceased’s assets and a comprehensive list of the deceased’s eligible beneficiaries.

Lastly, as the probate application to Court is very technical and many documents require notarization by lawyers, the best approach is to hire an experienced estate lawyer to handle this process. Otherwise, the application is often rejected by the Court as being incomplete or inaccurate.

The probate application requires the executor to provide a detailed list of ALL the assets owned by the deceased. This includes real estate properties, bank accounts, vehicles, investments… and their value. So how does one get this information?

Ideally, the deceased would have kept a list of assets owned during his/her life (as is the case when clients do estate planning with our firm). If not, then the executor must spend a lot of time searching for the assets:

Real Estate

If the executor knows the address of the deceased’s real estate, then as lawyers (in both real estate and wills & estate), we can easily get the deed from the Land Registry Office (LRO). If not, then we must go through the long process of searching the deceased’s name in each municipal LRO office. Also, when multiple property owners have the same name, we must examine each deed to ensure we get the right one.

Once we find the properties, the executor should hire a realtor or professional appraiser to prepare a comparative report, which will provide a good estimate of how much the property is worth in the year of the deceased’s death.

If there is a mortgage on title, then we must get a mortgage information statement from the bank, to know the amount of mortgage outstanding. This is the only value that may be deducted from the total estate value for Estate Administration Tax purposes.

Bank accounts and Investments

The executor should be going to each bank in which the deceased had an account or a bank access card to set up an Estate Case. This process may require the lawyer to prepare and notarize some documents, and in some cases, accompany the executor to the bank appointments.
After the Estate Case is established with the banks, the executor would be given a summary of all the bank account balances and investments owned by the deceased. Those accounts would also be labelled as “frozen” and all pre-authorized payments would be cancelled. This stops those accounts from being depleted before the beneficiaries can receive their inheritance.

Vehicles

All vehicles owned by the deceased must be listed on the probate application, with their value estimated by second hand vehicle vendors, Service Ontario, or car dealerships.

Companies

If the deceased owned any companies and there is NO Corporate Wills, then the corporate accountant or a professional appraiser must do an estimate of how much the corporation is worth. This information must be recorded on the probate application.

Other assets

Any other type of assets that have monetary value and owned by the deceased must also be listed on the probate application, including jewellery, paintings, etc.

Finally, it’s time to distribute the inheritance to the beneficiaries!

As this is the last step of estate administration, the lawyer executor must show the beneficiaries a detailed record or breakdown of all transactions that went on beforehand. For instance, how much money was taken out of the estate for legal fees, income taxes, creditor payments, etc. This way, the beneficiaries can rest assured that they are getting the maximum amount of inheritance reasonably possible.

In contrast, it is hard to get such detailed record-keeping from a non-professional executor, especially if that person is not used to keeping receipts and records of every single transaction from the estate account. Disputes between executor and beneficiaries are common, and a professional lawyer is usually better equipped to eliminate, reduce, and resolve such conflicts.

The first step to estate administration is telling the banks and other institutions that the person in question has passed away. Unless the executor does this themselves, there is not really any “automatic” way that the banks can be aware of this.

This will result in an “Estate Case” being created with the banks and other institutions, like mortgage lenders. That way, if any routine payments like mortgages are not made on time, the lenders would know the deceased is not doing that maliciously and on purpose, but rather it’s because he/she has passed away. This usually significantly reduce the risk of the banks starting selling off the estate assets like the estate property.

They will usually wait until the probate application has been approved before proceeding with legal actions.

Further, the lawyer executor would ensure that banks have cancelled all pre-authorized payments, such as monthly payments for internet fees, property taxes, etc. when creating the Estate Case. This prevents the estate account from being depleted and the beneficiaries receiving less inheritance at the end.

Once probate approval is given, the lawyer executor must gather detailed information about the deceased’s assets.

Bank Accounts

Correspondence with each bank’s estate department is very technical. In order to avoid liability, the banks will always require the executor to sign and notarize many documents before releasing the funds.

Also, since dealing with estate is often considered a non-urgent task with the banks, frequent follow-ups are required.

The lawyer is much better equipped in dealing with the bank’s estate department given their professional knowledge and experience. They can easily prepare and notarize forms, and can correct the bank’s instructions when they are inconsistent with the law.

Investments Accounts

Other than the banks, the deceased may have accounts with investment institutions such as MICs. Those institutions often require more complicated documents and correspondence before funds can be released. Again, this task is much easier for a knowledgeable and experienced estate lawyer.

Real Estate

Ideally, your lawyer executor should be both a Real Estate Lawyer and Wills & Estates Lawyer. That way, they can transfer any real estate owned by the deceased into the beneficiaries’ name. Or they can close the sale of property in the name of the estate and then transfer the sale proceeds to the beneficiaries. Being an expert in both areas of law means they would only charge the estate one single fee and not two legal fees.

Vehicles

The lawyer executor would purchase a Used Vehicle Information Package and facilitate the transfer of vehicle ownership at Service Ontario. Again, any documents that require preparation and notarization can easily be done by the lawyer executor.

When assessing the probate application, the Court will likely require the executor to purchase a bond insurance (often costing 5% of the entire estate) when:

1. The executor is a foreigner;
2. One or more beneficiaries are minors (under 18 years old);
3. There is a conflict of interest between the executor and the beneficiary (e.g. the executor is the ex-spouse of the deceased, and the beneficiary is their child)
4. There is no valid Will.

Especially in the above situations, appointing an experienced Estate Lawyer as the executor may be the best option. Unlike non-professional executors, lawyers have professional insurance and must be audited by the Law Society in every year they act as executor. So it is very unlikely for the Court to require a lawyer executor to pay bond insurance.

Also, with lawyer as executor, the estate should not be double-charged: once for legal fees and once for executor fees. Only the executor fees should be charged.