Second mortgage (second charge)

A buyer or a vendor can meet a second charge on real property that a first lender already holds, for example where the building comes with the business and the seller helps fund the price. How the charges rank matters to whoever is behind. See getting a loan to buy a business and the entry on a commercial mortgage.

How ranking works in two provinces

Under Ontario’s Land Titles Act, s. 78(5), instruments registered against the same estate or interest in the same parcel of registered land rank by the order they are entered in the register, not the order they were created, subject to any entry to the contrary and to the Act. Section 78(6) lets priority be postponed to another registered instrument. British Columbia’s Land Title Act, s. 28, ranks charges entered on the register against the same land by the date and time the applications were received by the registrar, subject to a contrary intention appearing from the instruments; other sections, such as s. 31 on caveats and certificates of pending litigation, can also affect priority.

• Ask for a title search showing every charge registered ahead.
• Ask whether any postponement is planned or already registered.
• This entry covers Ontario and British Columbia only; check the land registration rules where the property is.