WHAT ARE MORTGAGE INSTRUCTIONS?
Once a borrower has been approved for a mortgage, the lender will provide the borrower’s solicitor with mortgage instructions. Mortgage instructions typically set out what terms and conditions the borrower and their solicitor must satisfy prior to the closing date for the lender to release the funding for the mortgage. In our experience, mortgage instructions, among other things, will typically include the requirement of the borrower’s solicitor to conduct a title search to ensure correct priority and for the borrower to obtain title insurance and fire insurance to protect the lender’s interest in the property. The lender may require that certain debts be paid down or fully paid off prior to the closing date by the solicitor. The lender will also set out identification verification procedures to be followed by the solicitor and the manner in which documentation is to be prepared by the closing solicitor. Failure to follow the mortgage instructions may result in a delay in the funding or termination of the mortgage by the lender. It is important for the borrower’s solicitor to be diligent and ensure the mortgage instructions are reviewed in advance and the request for funds has been submitted to the lender in time, so the lender has time to process the mortgage.
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Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.
About the Author:
Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.