Real Property and Leasehold Estates

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Questions and Answers

Which type of mortgage allows the debtor to maintain possession of goods while the title is transferred to the creditor?

Operating Lease

Assignment of Book Accounts

Conditional Sales Agreement

Chattel Mortgage (correct)

What is the first step to create a secured relationship under the Personal Property Security Act (PPSA)?

Secured party and debtor enter into Security Agreement (correct)

Security interest must be perfected

Collateral is registered

Creditor takes possession of the collateral

Which of the following is NOT used as a method to secure debt with personal property?

Chattel Mortgage

Real Estate Contract (correct)

Pledge

Lease to Purchase

Under the Personal Property Security Act (PPSA), what can personal property used as security include?

License, shares, and bonds Signup and view all the answers

What gives a secured party a priority claim on collateral over the debtor?

First to register the security interest Signup and view all the answers

In which scenario can a creditor take possession of the collateral upon default?

Chattel Mortgage Signup and view all the answers

What happens to obligations such as student loans after an individual is discharged from bankruptcy?

They are still owed and do not get discharged. Signup and view all the answers

Which of the following is NOT a restriction on bankrupts?

They cannot work in any profession. Signup and view all the answers

Which of the following is an example of using 'chose in action' as security?

Assignment of Book Accounts Signup and view all the answers

Which of the following statements about corporate bankruptcy discharges is correct?

Corporations may restructure under certain acts to avoid bankruptcy. Signup and view all the answers

What is required for a security interest to be perfected under the PPSA?

Possession by the creditor or registration Signup and view all the answers

What is one of the roles of the federal government in environmental protection?

Enacting environmental protection laws under its criminal law power Signup and view all the answers

What is a condition that may require an individual debtor to pay surplus income after bankruptcy discharge?

If their annual income exceeds a certain threshold. Signup and view all the answers

What must a bankrupt disclose regarding their transactions?

All transactions regarding assets in the last year. Signup and view all the answers

Which act requires project proposals for activities potentially affecting the environment?

Canadian Environmental Assessment Act Signup and view all the answers

How does the CEPA encourage compliance from companies?

By allowing parties to negotiate solutions to avoid prosecution Signup and view all the answers

Which of the following is an alternative to bankruptcy available under BIA for debts over $250,000?

Division I Proposal. Signup and view all the answers

Which bankruptcy offense involves transferring assets for little or no consideration?

Fraudulent transfer. Signup and view all the answers

What is one limitation of common law remedies for environmental protection?

They require personal involvement and an individual must bear costs Signup and view all the answers

Which of the following is an example of provincial involvement in environmental legislation?

Provincial general environmental statutes Signup and view all the answers

What is a requirement for a bankrupt if they intend to borrow over $1000?

They must disclose their bankrupt status. Signup and view all the answers

What must occur regarding Indigenous peoples in relation to environmental projects?

They must be consulted with respect to projects in their territories Signup and view all the answers

What type of research does the Canadian Environmental Protection Act facilitate?

Research for measurement of pollution levels and monitoring industry Signup and view all the answers

What is a potential challenge with federal environmental projects?

They often lack adequate planning and significant public input Signup and view all the answers

What is primarily the responsibility of a mortgagor?

To repay the debt over the term of the mortgage Signup and view all the answers

Which statement best describes 'Foreclosure' in relation to the equity of redemption?

It brings an end to the equity of redemption by imposing a time limit. Signup and view all the answers

What must a lease be if it is for a term longer than three years?

Written and may need to be registered Signup and view all the answers

When a tenant does not leave after the lease term expires, which status do they fall under?

Tenancy at sufferance Signup and view all the answers

Which of the following is NOT a right that a landlord must provide to a tenant?

Regular maintenance and cleaning of the property Signup and view all the answers

What can a landlord do in response to a tenant's unpaid rent?

Sue for damages related to breach Signup and view all the answers

Which remedy could be used by the landlord if the tenant is in breach of lease terms?

Injunction against the tenant Signup and view all the answers

What does 'Occupiers Liability' require from a tenant?

To ensure safety for all visitors Signup and view all the answers

What is the primary role of a guarantor in a guarantee arrangement?

To ensure the debt is paid after the debtor defaults Signup and view all the answers

Which of the following is NOT a reason a guarantor may be released from obligation?

Debtor making timely payments Signup and view all the answers

Which statement accurately describes the nature of a purchase security money interest (PMSI)?

It does not usually bind the buyer in the ordinary course of business Signup and view all the answers

What is required for a guarantee to be enforceable?

It must be in writing and signed Signup and view all the answers

Which method of selling secured goods must creditors adhere to upon default?

It must be conducted in a commercially reasonable manner Signup and view all the answers

What do floating charges provide to creditors?

Priority over unsecured creditors without interfering in business operations Signup and view all the answers

What percentage is typically retained as a holdback in most provinces for builder liens?

10% Signup and view all the answers

What is the key responsibility of creditors towards the guarantor?

To guarantee the guarantor understands the terms Signup and view all the answers

What right does a debtor have upon default and the sale of goods?

To redeem the goods by paying the remaining debt Signup and view all the answers

What typically needs to be true for guarantees to avoid issues regarding consideration?

Guarantees are usually established under seal Signup and view all the answers

Study Notes

Real Property

Mortgage: Historically, title transferred to the lender, while the borrower retained possession.
Mortgage Agreement: Repayment of the debt over a long period, typically 25-30 years.
Mortgagor: Responsible for any shortfall in repayment.
Equity of Redemption: Right of the mortgagor to redeem the property even after default.
Foreclosure: Terminates the Equity of Redemption by setting a time limit.
Order for Judicial Sale: An application by another creditor to have the property sold.

Leasehold Estates

Landlord Retains Reversionary Interest: Landlord retains ownership, while the lessee has temporary exclusive possession.
Contract Law Applies: Lease agreements are governed by contract law.
Writing Requirement: Leases exceeding 3 years must be in writing, and long-term leases may need registration.
Leasehold Interest Runs with the Land: The leasehold interest is binding on future owners of the property.

Types of Tenancies

Term Lease: Defined to run for a specific period.
Periodic Tenancy: Rent paid periodically.
Sublets: Tenant sublets with permission of the landlord, which cannot be unreasonably withheld.

Rights and Obligations

Landlord Obligations:
- Provide vacant possession: Premises ready for occupancy.
- Provide quiet enjoyment: No interference with the tenant's use of the property.
- No general obligation to repair, unless it breaches "quiet enjoyment".
- Proper notice provided for termination of the lease.
- Tenancy at sufferance: Tenant remains after the lease expires.
Tenant Obligations:
- Pay rent: Potential rent abatement may be possible if the landlord breaches obligations.
- Not responsible for reasonable wear and tear.
- Responsible for repairs arising from unusual use.
- Right to remove their fixtures before lease termination.

Remedies for Lease Breaches

Landlord remedies: Sue for overdue rent and damages for breach.
Tenant remedies: Vacate the premises.
Forfeiture: Landlord forcibly vacates tenant by changing locks or obtaining an eviction order.
Relief against Forfeiture: Equitable principle allowing the tenant to have the lease reinstated, or the landlord retaining the right to payment if the premises are vacated.
Distress/Distraint: Landlord can seize the tenant's property for breach of lease.
Injunctions: Both landlord and tenant can seek an injunction for breach of the lease.
Occupier's Liability: Imposed on the tenant.

Environmental Protection

Common Law: Historically provided some provisions for protecting the environment.
Tort Nuisance: Protects individuals from their neighbor's property use.
Tort of Negligence and Trespass: Also used for environmental protection.
Common Law Limitations: Require personal involvement and individual cost-bearing.

Federal Government Role

Jurisdiction: Matters of interprovincial and international scope, federal land, and coastal waters.
Environmental Protection Laws: Enacts laws under its criminal law power.
Indirect Control: Influences provincial environmental projects by setting federal funding requirements.

Canadian Environmental Protection Act (CEPA)

New projects assessment: Environmental impact assessment is required.
R&D: Funding and development of pollution level measurement, monitoring industry, and punishing violations.
Negotiation: Empowering the Federal Government to negotiate with provinces and organizations.
Compliance Orders: Enables enforcement officers to issue orders.
Negotiation Focus: Encourages compliance through negotiated solutions to avoid prosecution.

Canadian Environmental Assessment Act (CEAA)

Project Proposal Requirement: Projects that potentially impact the environment require assessment.
Review: Assessing the need for further action.
Report Levels: From screening to comprehensive studies.

Other Federal Legislation

Transportation of Dangerous Goods Act, 1992: Regulates dangerous goods transportation.
Fisheries Act: Protects Canada's fisheries.

Provincial Legislation

General Environmental Statutes:
Issue-Specific Legislation:
Municipalities and Local Governments: Significant impact on environmental matters.

Environmental Project Issues

Resource Development: Prominent area of environmental concern.
Planning and Public Input: Requires sophisticated planning and significant public input.
Indigenous Involvement: Consultation required for projects located on Indigenous territories.

CEPA and Due Diligence

CEPA: Does not provide due diligence as an effective defence against environmental offenses.

Finance: Priority of Creditors

Secured Creditors: Obtain a claim on the debtor's property to increase chances of payment.

Real Property Security

Mortgage: Real property used as security.

Personal Property Security

Pledge: Debtor retains title, but possession is transferred to the lender.
Personal Property Security Act (PPSA): Standardizes security using personal property.
PPSA Applicability: Applies across Canada, including licenses, shares, and bonds.

Traditional Security Approaches:

Conditional Sales Agreement: Buyer possesses goods, seller retains title until final payment.
Chattel Mortgage: Creditor (not seller) uses goods as collateral, debtor retains possession.
Assignment of Book Accounts: Chose in action used as security (instead of goods).
Leases:
- Operating Lease: Goods rented for a specific period.
- Lease to Purchase: Goods transferred at the end of the lease term.

PPSA: Creating a Secured Relationship

Security Agreement: Secured party and debtor agreement.
Attachment: Security Interest attaches to collateral.
Perfection: Registered or possession by the creditor.

Priority of Secured Creditors:

Secured Party Priority: Higher claim over the debtor.
Priority with the Same Collateral:
1. First to Register
2. Purchase Money Security Interest (PMSI)
Buyer in Ordinary Course of Business: Not usually bound by security interests.

Remedies Upon Default:

Possession of Goods: Secured party can take possession of goods and sell them.
Sale Process: Usually involves a bailiff, must be commercially reasonable.
Right to Redeem: Debtor can redeem by paying the outstanding debt plus costs.
Surplus Proceeds: Debtor is entitled to any surplus after sale.

Guarantees

Guarantor's Role: Assumes payment responsibility if the primary debtor defaults.
Guarantee vs. Indemnity: Guarantees are secondary obligations, indemnities are primary.
Writing Requirement: Guarantees must be in writing.
Contract Elements: All elements of a contract must be present (consideration may be an issue).
Seal: Guarantees are often under seal to avoid enforceability issues.

Rights and Obligations of Parties:

Creditor Duties: Ensure the guarantor understands the guarantee and not weaken their position.
Guarantor Release:
- Substantial contract changes.
- Release of other security forms.
- Withheld important information.
Contract Modification: May modify rights and obligations to avoid obligations.
- Exemption clauses
- Continuing guarantees.
Subrogation: Creditor's rights are transferred to the guarantor who pays the debt.

Other Forms of Security

The Bank Act: Federal legislation allowing flexibility with security.
Bank Act Security: Includes growing crops, inventory, and goods in production.
Conflict with PPSA: Potential conflict between federal and provincial legislation.
Floating Charges: Used in corporate lending to maintain business flexibility.
Bonds (Debentures): Secured with a floating charge on the corporation's general assets.
Floating Charge Impact: Does not interfere with day-to-day operations but provides priority over unsecured creditors.
Builder's Liens: Claims for goods and services supplied to real property.
Lien Registration: Legislation governs registration process and timing.
Holdbacks: Property owner retains a percentage of payments to cover potential liens (10% in most provinces).

Bankruptcy Offences:

Asset Transfer Prohibition: Settlements transferring assets for minimal or no consideration are prohibited.
Preferential Payments: Void if within a year of bankruptcy, the debtor was insolvent or intended to defraud creditors.
Disclosure: Bankruptcy proceedings require full disclosure of transactions in the preceding year, and settlements in the past 5 years.
Cooperation: Cooperation with the trustee.
Asset Transfer: Assets must be transferred to the trustee.

Restrictions on Bankrupts:

Disclosure: Disclosure of bankruptcy status when borrowing over $1,000.
Corporate Directorship: Bankrupts cannot be corporate directors.
Professional Restrictions: Restrictions on certain professions.

Individual Discharge:

Conditional/Unconditional Discharge: May require payments from surplus income to the estate.
Absolute Discharge: Terminates most debts.

Obligations Surviving Discharge:

Student Loans:
Apprentice Loans:
Fines, Alimony, Maintenance Payments:
Child Support Payments:
Civil Damages Awards:

Corporations and Discharge:

No Discharge: Corporations cannot be discharged from bankruptcy.
Division I Proposal (BIA): Potential to avoid bankruptcy (debts over $250,000).
Division II Proposal (BIA): Consumer proposal.
Companies' Creditors Arrangement Act (CCAA): For corporations with large debts.
Director Liability: Directors may have personal liability.
Receivership: Can be triggered by security agreements, separate from bankruptcy.

Alternatives to Bankruptcy:

Negotiation: Engage with creditors to explore alternative repayment arrangements.
BIA Alternatives:
- Division I Proposal (over $250,000)
- Division II Proposal (Consumer)
Order Payment of Debts (Individual): Available in some provinces for debts under $1,000.
CCAA (Corporate): Bankruptcy protection for corporations with more than $5 million in debt.

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Description

This quiz covers key concepts related to real property and leasehold estates, including mortgages, foreclosure, and landlord-tenant relationships. You'll explore terms such as mortgagor, equity of redemption, and the legalities of lease agreements. Test your understanding of these important topics in property law.