What Happens If You Default on Your Mortgage in Manitoba

Missing a mortgage payment is stressful, and the fear of losing your home can make it hard to think clearly. The good news is that default is usually a process, not a single event, and you often have choices if you act early.

This article explains where a mortgage fits in Manitoba's land titles system, what to look for in your paperwork, and what options people commonly consider. It cannot tell you the exact steps your lender will take, because those depend on your mortgage contract and your situation. A lawyer can confirm them for you.

This article covers the law of Manitoba.

What default means and how your mortgage is recorded

In everyday terms, you are in default when you break the terms of your mortgage. The most common way is missing payments, but a mortgage can also set out other duties that, if broken, can count as default. Your mortgage document is the starting point for what counts.

In Manitoba, a mortgage is registered against the title to your land. The Real Property Act deals with mortgages and encumbrances in ss. 96 to 116, and s. 103 covers discharge of a mortgage. Registration takes effect from the day the instrument is assigned a serial number.

Priority of registration is also addressed in the Act (s. 64). This matters if there is more than one mortgage or claim against the property, because the order of registration can affect who is dealt with first.

What the lender can do and the notices you may receive

A lender who is not being paid generally has rights under the mortgage contract and under Manitoba law. Those rights, the notices the lender must give, and the time you have to respond all depend on the wording of your mortgage and the rules that apply to it. They are worth confirming with a lawyer rather than guessing.

What you can do right now is gather and read what you have received. Keep every letter, email and court document, and note the dates you received them. Do not ignore anything that arrives by mail or from a court, even if you are already talking with your lender.

• Your mortgage document and any renewal or amending agreements
• Letters or notices from the lender about missed payments
• Any statement showing what you owe, including arrears, interest and charges
• Any court papers you have been given
• Your property tax and insurance records, since those can also matter under a mortgage

Options people commonly consider to keep the home

The right option depends on why you fell behind and how long you expect the problem to last. Lenders are often more open to solutions when you contact them before the situation gets worse.

• Contact the lender early and ask what arrangements are available, such as catching up on arrears over time. Ask for any agreement in writing.
• Review your budget to see whether the shortfall is short term or ongoing.
• Ask whether refinancing or switching lenders is realistic, understanding that this depends on your income, credit and the value of the home.
• Consider selling the home yourself, which may let you pay out the mortgage and keep any remaining equity.
• Ask a lawyer or an accountant to review your overall debts, not just the mortgage.

If you sell, the mortgage is dealt with through a discharge, which the Real Property Act addresses in s. 103. In Manitoba, land transfer tax is generally payable by the buyer, not the seller, with some exceptions. Your lawyer can explain how the payout of the mortgage is handled on closing.

Spouses, common-law partners and other people with an interest

If you share the home with a spouse or common-law partner, their position matters. Under The Family Property Act, a family home is property in which a spouse or common-law partner has an interest and which is or was their family residence. A family home is a type of family asset.

The Family Property Act gives each spouse or common-law partner the right, on application, to an accounting and equalization, and the total is generally divided into two equal shares. The Act does not itself require the home to be sold. A court can vary the equal division of family assets only in limited cases, such as where it would be grossly unfair or unconscionable.

Who stays in the home is a separate question. Exclusive occupation of the family home is dealt with by a separate order under s. 80 of The Family Law Act. Other claims against the property may be recorded as caveats, which the Real Property Act covers in ss. 148 to 165. If more than one person has a claim on your home, get legal advice before making decisions.

What to do next

• Do not wait: contact your lender as soon as you know a payment will be missed.
• Collect your mortgage documents and every notice you have received.
• Write down what you have been told by the lender and when.
• Get a current copy of your title so you can see what is registered against the property.
• Speak with a Manitoba lawyer before signing any new agreement or listing the home for sale.
• If you share the home with a spouse or partner, talk to a lawyer about their rights and yours.

Every default situation is different. A lawyer can read your mortgage, explain which rules apply and help you weigh your options.

Frequently asked questions