Limitation Periods for Mortgage Enforcement
By: Samantha Grilli
The Real Property Limitations Act, R.S.O 1990, c. L.15 (“RPLA”) deals with limitation periods affecting real property. In this paper, I will examine the provisions and case law dealing with limitation periods for mortgage enforcement actions. There are two questions one must consider when dealing with limitation periods for mortgage enforcement – 1. How long is the limitation period? and 2. When does the limitation period start to run?
To answer the first question we look to section 23(1) of the RPLA. That section states:
No action shall be brought to recover out of any land or rent any sum of money secured by any mortgage or lien, or otherwise charged upon or payable out of the land or rent, or to recover any legacy, whether it is or is not charged upon land, but within ten years next after a present right to receive it accrued to some person capable of giving a discharge for, or release of it, unless in the meantime some part of the principal money or some interest thereon has been paid, or some acknowledgment in writing of the right thereto signed by the person by whom it is payable, or the person’s agent, has been given to the person entitled thereto or that person’s agent, and in such case no action shall be brought but within ten years after the payment or acknowledgment, or the last of the payments or acknowledgments if more than one, was made or given.
In plain language, the limitation period on mortgage enforcement actions is ten (10) years unless payment is made by the debtor or written acknowledgement is received by the creditor from the debtor, in which case the clock restarts. If neither of those items occur, enforcement on the mortgage will be statute barred. Debts that are not secured by a mortgage or lien or where action has not been taken to recover monies owing would preclude the RPLA from applying and instead the two year limitation period under section 4 of the Limitations Act would apply.
To answer the second question, we must look to case law. In the case of Cioccio v Cioccio, the judge had to decide, firstly, whether a mortgage placed on a matrimonial home was a demand mortgage or a conventional mortgage and secondly, when the limitation period began to run on the enforcement of said mortgage. The first issue was easily resolved and it was held that the mortgage was a conventional mortgage.
To answer the second question, the judge looked at section 23(1) of the RPLA as well as the case of Alter v Csontos which held that the limitation period starts running at the execution of the mortgage and not on demand for payment.
Finally, it is worth noting, that the limitation period set out by the RPLA also applies to guarantees, whether or not they form part of the mortgage covenant. The Court of Appeal in Hilson v 1336365 Alberta Ltd. found that the limitation period applies to guarantees whether they are part of the mortgage covenant or a stand-along guarantee as “it would create an awkward distinction between the limitation period to enforce a mortgage and the limitation period to enforce a closely related promise to pay the debt secured by the mortgage.”
When acting for lenders, real estate lawyers should be reminding their clients of the limitation period and requirements for extending them and/or diarizing the dates as a best practice to avoid liability. n
Samantha focuses on corporate and commercial law, residential and commercial real estate, wills and estate planning and is a member of The Hamilton Law Association and Hamilton Chamber of Commerce.
Samantha received her Juris Doctor from the University of Windsor in 2014 and was called to the Ontario Bar in 2015. Prior to that, she attended Wilfrid Laurier University where she graduated with an Honours Bachelor of Arts.
2 2005 CanLII 8735 (ON SC)
3Ibid para 12.
4 Ibid para 13.
5 Hilson v 1336365 Alberta Ltd., 2019 ONCA 1000 at para 28.