Closing in Days with an Old Mortgage on Title
It usually happens late. The buyer's lawyer searches title, finds a mortgage from decades ago, and sends a requisition that it be discharged on or before closing. The seller paid that loan long ago, or never knew it existed. Closing is days away. Here are the options.
Option 1: Close on an undertaking and holdback
The buyer's lawyer may agree to close on the seller's lawyer's undertaking to obtain and register the discharge after closing, with a portion of the sale proceeds held back in trust until it is done. This keeps the deal on schedule. The catch is that the undertaking must then be satisfied, and the seller does not receive the holdback until it is. For an old private mortgage with no one available to sign, that usually means a court order.
Not every buyer, lender or title insurer will accept this approach, particularly where the mortgage is large or the lender's position is unclear.
Option 2: Extend the closing
Where both sides agree, a short extension can give time to obtain the discharge or order. An extension should be documented properly, and any per diem or carrying costs agreed in writing.
Option 3: An urgent court order before closing
Where a discharge cannot be signed in time, the court can hear an application on an urgent basis. Urgency is not automatic. The court must be satisfied, from the evidence, that the matter genuinely cannot wait for an ordinary hearing date, and that the materials are complete.
When the documents are ready and the facts are straightforward, this can move very quickly. In suitable cases we have obtained a court order and registered it on title within four to five days of being retained.
What makes an urgent application fast
The biggest source of delay is missing evidence. If you can gather these early, you shorten the timeline:
The agreement of purchase and sale, the closing date and the buyer's requisition
The parcel register and the registered mortgage
Any proof the mortgage was paid
Death certificates and estate documents for a deceased lender
Corporate records or searches for a lender that is a company
Contact details for anyone connected to the lender or the loan
For the lawyers on the deal
If you are the seller's or buyer's lawyer and an old mortgage is threatening your closing, call us early. We can advise on whether an undertaking and holdback is workable, prepare the application in parallel, and report directly to you so that your undertaking can be satisfied and the holdback released.
General information only, not legal advice. Every matter turns on its own facts, and urgent hearings are at the court's discretion.
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