The Lender Has Died. How Do I Discharge the Mortgage?

Private mortgages between family members, friends and former owners were common for decades. Many were repaid quietly and never discharged. The problem surfaces years later, often on a sale, when the lender has died and someone has to sign a discharge on their behalf.

Who can sign for a deceased lender?

When an individual lender dies, the mortgage forms part of their estate. The estate trustee named in the will, or appointed by the court, generally has authority to sign a discharge. Depending on the circumstances, the trustee may need a Certificate of Appointment of Estate Trustee (probate) before the discharge can be registered.

Where the lender was one of two joint mortgagees, for example spouses, the survivor may be able to sign alone. The answer depends on how the mortgage was registered.

When the estate route works

The estate route is usually the fastest and least expensive solution. It works well where the estate trustee is known, cooperative and able to act, and where there is reasonable evidence that the loan was repaid. A trustee who cannot confirm repayment may reasonably be reluctant to sign, since releasing an unpaid debt could expose them to the beneficiaries.

When the estate route does not work

It is common for there to be no practical way to get a signature. The estate was never administered. The trustee has also died. The family cannot be located. Or no one can confirm the loan was repaid.

In those cases, the Superior Court of Justice can order the mortgage discharged under the Mortgages Act, or order the register rectified under the Land Titles Act. If the evidence shows the loan was paid, the court can order the discharge outright. If there is doubt about what remains owing, the court can allow the amount to be paid into court so that title can be cleared while any entitlement to the money is sorted out later.

What evidence helps

• The registered mortgage and the parcel register

• Any record of payment: cancelled cheques, bank statements, receipts, or even the lender's own handwritten ledger

• Death certificates for the lender and any joint lender

• The lender's will, and any Certificate of Appointment of Estate Trustee

• Correspondence or other evidence about the loan and its repayment

• A record of the efforts made to locate the estate trustee or family

  
  

No single document is essential. Courts regularly grant these orders on a sensible combination of documents and sworn evidence from the owner.

If you are selling

If an old private mortgage is discovered on a sale, the buyer's lawyer may agree to close on the seller's lawyer's undertaking to discharge it, usually with part of the sale proceeds held back. That allows the sale to close, but the holdback is not released until the discharge is registered. We regularly act on these files and work toward a fast court order so the funds can be released.

How we can help

We deal with estate-held and private mortgages across Ontario, from tracing the estate to obtaining and registering the order. Contact us with what you know about the mortgage and the lender, and we will advise on the most efficient route.

General information only, not legal advice. Every matter turns on its own facts.