Understanding and managing a notice of Legal Mortgage

What is a Legal Mortgage?

A legal mortgage is a legal right granted to a creditor to secure the repayment of a debt using real estate as collateral. Unlike a conventional mortgage, which is based on a voluntary agreement between parties, a legal mortgage can arise from various legal circumstances such as unpaid taxes, court judgments or unpaid debts to a condominium corporation. This measure allows the creditor to claim the debtor’s real estate in case of non-payment of the debt.

Types of Legal Mortgages

• State Legal Mortgage
  This form of legal mortgage arises when taxes remain unpaid to tax authorities. The Department of Revenue or the Canada Revenue Agency (CRA) may register a legal mortgage on the debtor’s real estate to recover the unpaid amounts.
• Legal Mortgage resulting from Judgment
  These legal mortgages generally result from a court judgment regarding unpaid debts such as credit cards or lines of credit. If a court renders a judgment in favor of the creditor, they may issue a legal mortgage on the debtor’s real estate to secure the payment of the debt.
• Legal Mortgage from a Condominium Corporation
  In cases where a condominium owner is in default of payment (condominium fees, common expenses, or contribution to the reserve fund) for more than 30 days, the condominium corporation may register a legal mortgage with the aim of being paid.

Consequences of a legal mortgage

When a legal mortgage is registered against your property, it directly affects your ability to manage your real estate. One of the main consequences is the impossibility of selling or refinancing the property until the legal mortgage is lifted. In other words, you lose much of the flexibility you normally have to manage your real estate assets.

What’s more, if the notice of legal mortgage remains unpaid, the creditor could take steps to seize your property. Once foreclosure has begun, the options for preserving your property become more limited, making it essential to act quickly to resolve the situation.

The first steps

If you receive a legal mortgage notice, it’s crucial not to ignore the situation. Here are the first steps to consider:

1. Check the legitimacy of the notice: make sure the notice of legal mortgage is justified. Take the time to understand the amounts claimed, the parties involved and the reasons for issuing the notice.
2. Contact the parties involved: if the legal mortgage concerns unpaid work or a dispute with a contractor, for example, contact these parties as soon as possible. It may be possible to find a negotiated solution to lift the mortgage without having to go further in the legal process.
3. Don’t remain passive: letting the situation fester will only make matters worse. The sooner you act, the better your chances of protecting your property and finding a solution before severe measures are taken.

Solutions to deal with a legal mortgage

There are several ways to lift a legal mortgage, depending on your situation. Here are the most common options:

Negotiation with the creditor or contractor
In some cases, it’s possible to negotiate directly with the party who issued the legal mortgage. If you owe money for work or to a supplier, it may be useful to draw up a repayment plan or agree to an out-of-court settlement. This option can sometimes enable you to lift the mortgage quickly, without having to go through other financial processes.

Take out a private mortgage
If you are unable to pay the amount due immediately, another option is to take out a private mortgage. Unlike traditional banks, private lenders can offer faster, more flexible solutions. A private mortgage can be used to pay the amount of the legal mortgage, freeing you from the constraints imposed on your property.

Private mortgages are often approved quickly, without a credit check, and can offer more flexible repayment terms. This solution can be particularly useful if you’re under pressure of time and need to quickly lift the legal mortgage to protect your property.

Selling the property
In extreme situations where it is not possible to negotiate or obtain a loan, the sale of the property may be considered. This allows creditors to be repaid and foreclosure avoided. Although it may seem like a radical solution, selling your property on time can sometimes get you out of a difficult financial situation.

How Lauréat Finance can help you?

When faced with a legal mortgage, it’s essential to understand your options and take steps to protect your financial and real estate interests. At Lauréat Finance, we understand the challenges you’re facing, and we’re here to help you find solutions.

• Situation analysis
  Our team of experts will conduct a thorough analysis of your financial situation and the legal mortgage in question to understand your specific needs.
• Solutions
  Based on our analysis, we will propose tailor-made solutions to manage your legal mortgage. This may include options such as debt restructuring, negotiation with creditors, or obtaining a private loan to repay the debt. Additionally, Lauréat Finance can provide loans tailored to each situation, offering a customized approach that takes into account the complexities of each case.
• Personalized support
  Throughout the process, our team will provide you with personalized and human support and advice to help you navigate the challenges of your financial situation. Our goal? To turn an obstacle into a solution.

Legal mortgages can present significant challenges for property owners, but with the right help, they can be successfully overcome. At Lauréat Finance, we’re committed to providing you with the support you need to effectively manage your legal mortgage and regain control of your financial situation.