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Construction Mortgage-Important Clarification by Court

Construction Mortgage-Important Clarification Court

Ontario Superior Court Clarifies Priority Of Construction Lien Claimants Over Building Mortgages

The Ontario Superior Court of Justice in BCIMC Construction Fund Corp. et al. v. 33 Yorkville Residences Inc et al.1 recently held that construction lien claimants are entitled to one holdback fund of 10%, regardless of the number of building mortgages registered on title to the subject property improved.

Background

In BCIMC Construction, the Court was asked to interpret section 78(2) of the Construction Act (the “Act“). In short, this section provides that where a mortgagee takes a mortgage with the intention to secure the financing of an “improvement,” the liens arising over that improvement have priority over the mortgage(s), to the extent of any deficiency in the holdback. This holds true irrespective of the priority of the mortgage. Source Mondaq Read More

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