First Mortgage

Priority in BC is generally determined by the order in which charges are registered against a property's title at the BC Land Title Office under the Land Title Act. A first mortgage, registered before any subsequent mortgages or other charges, holds the senior claim against the property. This means that in a default or foreclosure scenario, the first mortgage lender's debt is satisfied before the claims of any second mortgage holder or other encumbrancers.

Foreclosure in BC is a judicial process governed by the BC Supreme Court Civil Rules and the Law and Equity Act — BC does not use a power-of-sale process as some other provinces do. In a foreclosure action, the court-ordered sale proceeds are distributed according to registered priority, meaning the first mortgage lender is paid out in full before any second mortgage holder or other charge holders receive anything. Any surplus after all registered encumbrances are satisfied may be returned to the borrower.

The BC Land Title Office, operating under the Land Title Act, is the official registry where mortgage instruments (called 'charges') are registered against a property's certificate of title. Registration at this office establishes the mortgage's legal existence and determines its priority relative to other registered charges. A lender generally cannot claim first mortgage priority without completing this registration.

Under the Real Estate Services Act (RESA) and its Rules, as administered by the BC Financial Services Authority (BCFSA), licensees have duties of disclosure to their clients and, in some circumstances, to unrepresented parties. A licensee must disclose material latent defects and material information that could affect a transaction, and the existence of a significant financial encumbrance such as a first mortgage on title would generally be considered material information. Licensees should consult current BCFSA guidance for the precise scope of their disclosure obligations.

The first mortgage on a strata lot functions the same way in terms of Land Title Office priority registration, but the strata lot exists within the framework of the Strata Property Act (SBC 1998, c. 43). Under that Act, a strata corporation may have a lien for unpaid strata fees and special levies that, in certain circumstances, can affect a mortgage holder's recovery. Lenders and buyers should be aware of any outstanding strata obligations, which can be confirmed through a Form B Information Certificate obtained from the strata corporation.

Property Transfer Tax under BC's Property Transfer Tax Act is calculated on the fair market value of the property at the time of transfer, not on the mortgage amount, using the current tiered rate structure of 1% on the first portion, 2% on the next portion, 3% on a higher portion, and an additional 2% on the residential value exceeding $3,000,000. The PTT is the buyer's obligation regardless of whether financing is obtained through a first mortgage or otherwise. Eligible first-time home buyers may qualify for a full PTT exemption on qualifying properties up to $835,000, subject to conditions set out in the Property Transfer Tax Act.

Yes, a mortgage can be registered against land within the Agricultural Land Reserve, as the Agricultural Land Commission Act (SBC 2002, c. 36) does not prohibit financing charges on ALR land. However, lenders typically conduct careful due diligence because ALR land is subject to significant use restrictions administered by the Agricultural Land Commission, which can affect the property's marketability and value in a default scenario. Buyers, sellers, and lenders dealing with ALR properties should consult the Agricultural Land Commission directly for guidance on applicable restrictions.

When a registered property owner dies, their estate is administered under the Wills, Estates and Succession Act (WESA), and the first mortgage remains a registered charge on title that the estate must address. The executor or administrator of the estate is responsible for managing the mortgage obligations, and the property generally cannot be transferred to beneficiaries or sold without the mortgage being discharged or assumed. A court grant of probate or administration may be required before the Land Title Office will register a transmission or transfer of the mortgaged property.

When a borrower applies for a first mortgage in BC, the lender collects personal financial information such as income, credit history, and asset details; this collection is governed by BC's Personal Information Protection Act (PIPA), which requires that personal information be collected only for identified purposes, with consent, and that it be protected appropriately. Borrowers have the right under PIPA to access their own personal information held by the lender and to request corrections. Lenders should provide a clear privacy notice explaining how personal information will be used and disclosed.

Priority between registered charges on BC title is generally determined by registration order at the BC Land Title Office under the Land Title Act, so a first mortgage registered before the HELOC would hold priority over it. In a foreclosure or forced sale, the first mortgage lender would be entitled to repayment from sale proceeds before the HELOC lender. Homeowners and lenders sometimes enter into priority agreements to alter this order, but any such agreement should be reflected through proper registration or notation at the Land Title Office.