Can a Lender Pay My Lawyer Directly on an Alberta Mortgage?

If you are buying or refinancing in Alberta, the lender usually does not hand the mortgage money to you. In most files the money is arranged to go through your lawyer, who then deals with the seller or pays out the old mortgage.

The rules on exactly when funds arrive depend on your lender's instructions and your lawyer's professional obligations, so this article focuses on what the law says about the paperwork that has to happen around the money. Ask your lawyer about timing on your particular file.

This article covers the law of Alberta.

Why the money usually goes through your lawyer

A mortgage is a charge on land created for securing a debt or loan. The lender wants to be sure its security is properly in place before its money is committed to the deal. Your lawyer is the person who prepares and submits the registration, so it makes practical sense for the funds to be directed there.

Whether a lender sends funds directly to a lawyer's trust account, and how soon they arrive, is a matter of the lender's instructions and your lawyer's practice. It is not something this article can promise for every lender. Confirm it with your lawyer early.

What has to happen first

For registration, you as mortgagor execute the mortgage in the prescribed form or to the like effect. If the lender uses standard terms, the mortgage must state that it consists of those terms, set out the principal sum, and be dated and executed by you.

• You review and sign the mortgage documents with your lawyer.
• The lawyer submits the mortgage to Land Titles on the prescribed form, and fees must be paid at the time of submission.
• The Registrar assigns a serial number only after the request is examined and found complete and in proper form.
• Once registered, the submitter receives a registration notice.

Priority between lenders is decided by the serial number the Registrar assigns, not by the date anyone signed. When you will be asked to sign, and how that fits with the release of funds, depends on your lender's instructions, so it is worth confirming with your lawyer.

Refinances, switches and payouts

A discharge is needed when you switch lenders: the old mortgage is discharged and the new lender is added to title. A discharge is also needed when you sell. In practice, your lawyer often arranges for part of the new funds to pay out the old lender, but the amounts and timing depend on the payout figures and the lender's instructions.

Once a discharge is entered on title, the land stops being liable for the principal sum or the part discharged. A discharge is normally in the prescribed form, signed by the mortgagee and accompanied by the proper affidavit of execution.

Once a mortgage is fully paid, the mortgagee must give you a discharge of mortgage within 30 days. If a lender cannot or will not sign a discharge, a judge's certificate that the secured money has been paid can allow the Registrar to discharge the mortgage.

If you have a home equity line of credit tied to the old mortgage, it also needs to be paid off.

Costs that show up at closing

The mortgage levy is $50 plus $5 for each $5,000 or portion of the principal secured. It applies to submissions received on or after October 20, 2024, when mortgage registration went from $1.50 per $5,000 of value to $5 per $5,000 of value. If the Registrar does not accept the mortgage for registration, the levy is returned to the payer.

The levy is reduced in some cases. If the new mortgagee is the same person as the mortgagee on an existing registered mortgage, and the new mortgage supplements it, is collateral to it, substitutes for it, or partially replaces it against one condominium unit, the formula applies only to the additional interest or principal. An amending agreement that increases the principal is levied only on the increase. The levy also does not apply to the Crown in right of Canada, or to the Crown in right of Alberta, except its agents, the Minister of Municipal Affairs acting under Part 10 of the Municipal Government Act, and the Public Trustee.

For discharges, a mortgagee cannot charge a fee or expense for the discharge itself. Professional fees for a lawyer, notary or commissioner of oaths generally run from $400 to $2,500, according to federal consumer guidance.

What to do next

• Ask your lawyer how your lender sends funds and when they are expected to arrive.
• Ask what must be signed, and by when, before the lender will release the money.
• Have your lawyer confirm the payout figure for any existing mortgage or HELOC.
• Ask for a written list of the closing costs, including the levy.
• Be careful with any request to send money or documents somewhere other than your lawyer's office, and check it with your lawyer first.

Frequently asked questions