mortgage lending criteria self-employed the biggest meth may actually be right
mortgages rely upon the provincial land registry system to determine what
obligations are secured against real property and in what order of priority
when it comes to mortgage lending criteria self-employed a recent court
decision has proven that when it comes to the self-employed if there is a
deemed trust claim by Canada Revenue Agency CRA you cannot solely rely upon
the registry system the court case I am referring to is Canada v
toronto-dominion bank 2018 FC 538 Kenley which was heard in federal court in this
matter the crown on behalf of Her Majesty looked to recover funds
toronto-dominion bank TD obtained from one of its clients who repaid a loan
secured by a home mortgage upon the sale of his house the client was a
self-employed person the crown claimed that there was an outstanding Deane
trust claim for collected by unremitted GST the crown further claimed that the
proceeds from the sale of the home collected by TD was subject to the CRA a
deemed trust claim was therefore property of Her Majesty and that TD had
to pay it over TD did not take the position that it had a registered first
charge and was entitled to keep the funds it argued that as a bona fide
purchaser for value it is not subject to the deemed trust claim and does not have
to pay over the money the borrower carried on a landscaping business as a
sole proprietor in 2007 and 2008 he collected and did not remit GST totaling
67,000 $854 TD held both a registered mortgage and a home equity line of
credit talak against the borrower's home the
home was sold in 2011 and the borrower repaid the mortgage and Halleck in full
from the sale of the home almost two years later in April 2013
CRA may demand on TD for repayment of 97 thousand
$327 revised in 2015 by amended demand in the amount of 67,000 $854 TD refused
to pay the federal court reviewed the legislation the court decided that the
funds paid to Gd from the sale of the house were proceeds of the sale of his
property which was caught by the deemed trust CRA claimed so the court found
that the requirements of section 222 of the excise tax act were met the court
agreed with the Crown's position that the deemed trust Canada claim covered
the debtors house notwithstanding there was no registration on title and that
the bank had proper valid registrations the court further agreed that according
to section 222 three of the Income Tax Act the bank has an obligation to pay
over the proceeds it received which were impressed with the deemed trust the
court disagreed with TD's position t-d also offered certain public policy
issues in its defense but the court was not swayed the court ordered t d to pay
over the amount of sixty seven thousand eight hundred fifty four dollars
interest and costs the biggest myth is as follows when doing mortgage lending
to self-employed people when you want to find out what claims there are against
the real property you only have to perform a title search this is an
important decision for mortgage lending criteria self-employed people what this
means for mortgages is that they can no longer just accept funds from a
self-employed person who wishes to pay off the loan be it a mortgage or other
type of loan from the sale of property it also cannot merely accept funds to
pay off a loan from a self-employed individuals business bank account rather
the lender also must now obtain a true copy of a statement from CRE showing
that there are no amounts owing by the self-employed person on account of
either HST or source deductions as the employer of others lenders would also be
well advised to add language to their loan term sheet loan documents and any
other documents issued when a loan is repaid the new language would be an
attestation by the self-employed borrowers that there are no amounts
owing to any government authority that would be
considered or deemed to be a trust claim further the language would have to make
it clear that in the event there were any such amounts owing even if the loan
was fully repaid the lender had the right to demand and sue the borrower for
any amounts proven to be a deemed trust claim that the lender was required to
pay over to the government at some later date does your business need HST and
source deductions you collected to stay afloat can your business not afford to
pay over to the government deem trust claim amounts collected if so then your
business is in trouble and requires restructuring immediately you need the
advice of a professional trustee now contact IRA Smith trustee and receiver
incorporated now for a free consultation you are just one phone call away from
getting back on the road to financial health and reducing your stress levels
starting over starting now I hope you enjoyed the video the IRA
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solid plan for starting over starting now so that you'll be well on your way
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