What Are My Rights if I Am a Guarantor on a Mortgage in Alberta?
This answer covers the law of Alberta.
As a guarantor, you generally promise the lender that the mortgage will be paid if the borrower does not pay it. Your exact rights and risks depend mostly on the guarantee document you sign, so read it closely and get legal advice before signing.
A registered mortgage is security only and does not transfer the land, so the borrower stays the registered owner. In a mortgage enforcement action, the lender's right is generally restricted to the mortgaged land, and a borrower cannot waive that protection. That protection does not apply to mortgages given by corporations or to a high-ratio mortgage as defined in the regulations. Whether any of this protects a guarantor, rather than the borrower, depends on the documents and is worth confirming with a lawyer.
Once the mortgage is fully paid, the lender must give the borrower a discharge of mortgage within 30 days, and cannot charge a fee for it. If the borrower defaults, the lender's options depend on the mortgage and the guarantee, so ask a lawyer before you agree to sign.
Key takeaways
- Your rights and risks as a guarantor depend mostly on the guarantee document, so have a lawyer review it before you sign.
- A registered mortgage is security only, and the borrower stays the registered owner of the land.
- The rule limiting a lender to the mortgaged land does not apply to mortgages given by corporations or to high-ratio mortgages as defined in the regulations.
- Once the mortgage is fully paid, the lender must give the borrower a discharge within 30 days and cannot charge for it.