SERVICE STANDARDS – LOAN TAKING
Applies to Ontario and Atlantic Canada: New Brunswick, Newfoundland, Nova
Scotia and PEI
The following provisions constitute instructions and are deemed incorporated into any mandate or
instructions given by BDC to a solicitor. Acceptance of any mandate incorporates acceptance of
these terms. This form will change from time to time and should be checked on line for changes
when instructions are received.
Recent Changes (see sections in red in body of document as follows):

August 1, 2014:
o 3 (ii) Delegation – new requirements for delegation and professional liability insurance
based on loan amount – no longer based on total commitment to BDC
o 3 (iv) Errors and Omissions Insurance clarification
o 7(iii) Reporting – new requirements for Partnership and Trust opinions
o 7 (v) Reporting – Electronic: the document naming convention (the Schedule A in our
previous version of the Service Standards) has been changed to simplify the electronic
naming of security documents
o 8 Loan Amendments – instructions re preparation of new security based on loan
amendments
o 9 (ii) Insurance changes – new requirement to provide certificates, BDC to be named as
Mortgagee for property insurance, changes to Aviation and Aviation General Liability
o 10 (ix) New Atlantic Collateral Readvanceable Mortgage
o 11 (i) PPR financing statements to be filed for a period equal to the maturity date of the
loan plus 5 years
o 11 (vii) New requirement for registration of charges on Rolling Stock
o 11 (ix) New requirements for charges on Aircraft at The International Registry for
International Interests in Mobile Equipment (Aircraft Equipment)
o Schedule A has been eliminated – other Schedules have been renumbered
TABLE OF CONTENTS
PART I – Doing Legal Work for BDC
1.
2.
3.
4.
5.
6.
7.
8.
Legal Entities
BDC Expectations and Communications
Acting for BDC
Small Loans
Equipment Line Loans
Loan Disbursement
Reporting
Loan Amendments
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PART II –Security Taking Topics
9. Miscellaneous Topics
i.
Multiple Jurisdictions
ii.
Insurance on Assets
iii.
Insurance When Commitment over $25 Million
iv.
Insurance Confirmation Checklist
v.
Life Insurance
vi.
Prior Permitted Charges
vii.
Searches
viii.
Landlord’s Undertakings/Waivers
ix.
Loans to Corporations TBI
x.
Share Purchases
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10. Mortgages of Land
i.
Taxes
ii.
Readvanceable Mortgages
iii.
Existing Readvanceable Mortgages
iv.
Existing Mortgages – Surveys
v.
Mortgages Not on Demand
vi.
Capped Mortgages
vii.
Mortgage of Lease
viii.
Ontario Mortgage Forms
ix.
Atlantic Mortgage Forms
x.
Condominiums
xi.
Holdbacks for Construction Loans
xii.
Surveys and Title Insurance
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11. Personal Property Security
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Schedule A – Title Insurance Endorsement (First Canadian)
Schedule B – Title Insurance Endorsement (Stewart Title)
Schedule C – Title Insurance Endorsement (Chicago Title)
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PART I – Doing Legal Work for BDC
1 Legal Entities

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

Business Development Bank of Canada - BDC is a federal crown corporation created by the Business
Development Bank of Canada Act. It is a continuation of the former Federal Business Development
Bank and stands possessed of all security granted to the FBDB that may still be outstanding.
Business Development Bank of Canada Act S.C. 1995, Chapter 28
Continuation of Federal Business Development Bank -- s. 3(1)
3. (1) The Federal Business Development Bank established by the Federal Business Development
Bank Act is continued as a body corporate under the name "Business Development Bank of Canada".
AlterInvest Fund LP and AlterInvest II Fund LP – BDC is the general partner and until recently most of
the loans/investments made by the Subordinate Financing Group of BDC have been made under
AlterInvest II Fund LP. Older loans and investments were made under AlterInvest Fund LP and prior
to that under BDC. The Subordinate Financing Group and a Business Centre sometimes have a
common client. In that case a priority agreement may be required between BDC and an LP.
BDC Capital Inc. – this subsidiary is now used primarily by our Subordinate Financing Group for new
clients.
2 BDC Expectations and Communications
i)
Dealing with BDC Staff
You will direct all your correspondence and inquiries to, and receive your instructions from, the BDC
representative who issued your instructing letter (the “S&D Officer”). You may contact BDC’s internal
Legal Services directly for technical questions, if required.
ii) Form of Correspondence
Written correspondence with the S&D Officer may be conducted by e-mail, surface mail or fax.
iii) Reliance



We are completely relying on you to place the required security in an enforceable fashion and in the
rank of registration as per each Instructing Letter we may send to you. We will not be reading or
checking any security that you provide.
You will not provide BDC with legal documents for our review. If you require BDC’s direction as to a
particular form or change to a form, you are to provide your recommendation to the S&D Officer
together with sufficient commentary so that BDC can make a decision on the question.
Documents, such as priority agreements, presented to the S&D Officer for signing should only be
presented with your recommendation that they should be signed and not for BDC’s consideration or
review. If you require a decision as to some specific issue in the form, you should set that out in writing
to the S&D Officer and provide your recommendation.
iv) Letter of Offer
Our Letter of Offer constitutes our only loan contract and sets out our required security and the rank of
registration of that security that we require you to obtain. Any change in the security requirements
requires an amendment to the Letter of Offer, which the S&D Officer will prepare after the change is
approved and arrange to have signed. If you recommend any change in the security, please do so in
writing to the S&D Officer or instructing office and await approval in writing before making any
changes.
If you receive a change in instructions orally you are to confirm that change in writing back to the S&D
Officer.
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v)
Response Times
Feedback from BDC clients indicates concerns about the time required to complete security in many
cases. While BDC appreciates that there can be any number of causes of delay outside your direct
control, in an effort to avoid delays and to identify problems quickly, please adhere, as a minimum, to
the following requirements:
 The client is to be advised of the documentation and information you require within two (2)
business days of your receipt of the Instructing letter;
 If the client has not responded within two (2) business days of your request, follow-up by telephone
is required, and advise BDC;
 Searches must be ordered within two (2) business days of receipt of the search data;
 BDC is to be advised immediately of any problems encountered in the searches; and
 All the documentation should be submitted only when the file is complete. If you cannot complete
the security within forty-five (45) days of the date of the Instructing Letter, advise BDC.
3 Acting for BDC
i)
Contact Solicitor

BDC will direct its loan taking work to a Solicitor in a firm who will be responsible for the relationship
with BDC and conduct of BDC loan taking files in that firm for that city or province (the “Contact”).
Where a firm has offices in more than one city, there may be different Contacts named by BDC for
different cities.
Instructing Letters for loan taking work going to that firm will normally be directed to the Contact. If
instructions are to be sent directly to another solicitor in that firm the written approval of the Contact is
required.


ii)
Delegation

Regular Loan Taking (loans for $10M or less) - The Contact may delegate all or part of the legal
work to other professionals in their firm to limit costs or satisfy client preferences provided that the
delegated professional satisfies BDC’s requirements for errors and omissions insurance. The Contact
may engage legal professionals of their choice in other jurisdictions as necessary for searches,
registration or security completion. Involvement of professionals at a higher hourly rate requires the
approval of the S&D Officer.
Loans where the loan amount is over $10,000,000 – The Contact has been selected for their
personal skill and qualities and must remain in active control of all files instructed. They may delegate
parts of the work to other professionals in the firm or agents at the same or lower hourly rate, as they
feel appropriate within this limitation. The Contact may engage the services of legal professionals of
their choice in other jurisdictions as necessary for searches, registration or security completion. Use of
another professional or agent at a higher hourly rate requires the approval of the S&D Officer.

iii) Acting For BDC and the Borrower
This is not permitted on loans over $3,000,000 without the consent of internal BDC Counsel. It is
permitted on loans under that amount if there is clearly no conflict.
iv) Insurance
You will maintain per claim errors and omissions insurance in an amount at least equal to the amount
of any loan instructed to you.
v)
Confidentiality
BDC owes its clients an obligation of confidentiality as set out in section 37 of the Business
Development Bank of Canada Act and you are required to keep the borrower’s and guarantor’s
information confidential beyond such release as is necessarily permitted for the loan security taking
process.
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37.(1) Subject to subsection (2), all information obtained by the Bank in relation to its customers is privileged
and a director, officer, employee or agent of, or adviser or consultant to, the Bank must not knowingly
communicate, disclose or make available the information, or permit it to be communicated, disclosed or made
available.
(2) Privileged information may be communicated, disclosed or made available
(a) for the purpose of the administration or enforcement of this Act and legal proceedings related to it;
(b) for the purpose of prosecuting an offence under this Act or any other Act of Parliament;
(c) to the Minister of National Revenue solely for the purpose of administering or enforcing the Income Tax Act
or the Excise Tax Act; or
(d) with the written consent of the person to whom the information relates.
vi) Security Forms

You will use the standard BDC forms available on the Internet – www.bdc.ca/forms (English forms) or
http://www.bdc.ca/formulaires (French forms). If it is necessary to use a different form where a
standard BDC form of that type is available you must obtain the prior consent of internal BDC
Counsel.

Tip Sheets – some forms come with a disposable coversheet with specific instructions as to the use or
completion of that form. These coversheets constitute instructions.

Modification of Forms – The body of the standard BDC forms should not generally require modification
but if you feel it is necessary to make minor changes in order to provide valid, effective and
enforceable security you may make those changes but must advise as to the particulars and nature of
those changes in your Solicitor’s Report.

Priority Agreements – Although there is a priority agreement in the package of standard BDC
documents its use is not mandatory (subject to the following bullet point) as the circumstances of
loans vary widely and we look to you to use such forms and wording as you feel appropriate to put
BDC in the required priority position. You do not have to comment in your report on changes to that
form, if any.

BDC and RBC have agreed upon three forms of priority agreement to be used on loans involving
mutual customers. Form A contemplates that RBC will have priority over inventory and accounts
receivable, with BDC having first priority over the remainder of the borrower’s personal property. Form
B contemplates that RBC will have priority over inventory, accounts receivable and specific listed
equipment, with BDC having first priority over the remainder of the borrower’s personal property.
Form C contemplates that BDC will only have first priority over specific listed equipment, with RBC
having first priority over the remainder of the borrower’s personal property. If you are instructed on a
loan where RBC is the other lender, you should use the applicable form. The forms are available with
the other standard BDC forms available on the Internet.

Other Forms – If forms other than those standard forms provided by BDC are required we expect you
to prepare such forms.
vii) Document Signing
Where the borrower or guarantor wishes to sign security documents in your presence, we would
request that you accommodate them rather than requiring them to engage counsel. In this case we
would expect that you would have such persons sign an additional document indicating that no legal
advice was sought or given, that they had the opportunity to seek other counsel, etc.
Exceptions:
 You will be expected to require independent legal advice for a borrower or guarantor where you
feel those concerns arise on the information before you.
 In those cases where you are not able to provide signing services internally we would expect you to
have arrangements with an arm’s length law firm who would provide signing services at a
reasonably modest fee.
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4 Small Loans
The Instructing Letter may identify a loan as a "Small Loan" for security taking purposes, and for which
reduced requirements apply. As to Small Loans only, where there is a conflict between this section
and requirements elsewhere in this document, the requirements of this section govern.
i)

Searches/Priorities–Restricted Requirements

Except for the Land Titles or Land Registry where land is charged, no searches are required including
governmental lien searches, PPR searches, execution searches etc.
Although the Letter of Offer requires a particular ranking of security, you are not expected to confirm
priority of registration except for mortgages of interests in land. (Note: for jurisdictions where land is
registered in a Registry System, a subsearch is sufficient for this purpose.)
ii)
Insurance/Taxes/Surveys
Unless specifically instructed otherwise, you are not expected to:
 Confirm that insurance is in place;
 Confirm that property taxes have been paid on mortgaged land; or
 Obtain surveys of mortgaged lands.
iii) Company Status

No opinion is required as to the corporate capacity of either the borrower or the guarantor. However,
we do expect you to search the provincial corporations registry to confirm the identity and existence of
the corporation.
iv) Solicitor’s Report

No Solicitor’s Report is required. Instead, we only require your written confirmation that security has
been received, registrations are completed and priority of land registrations is in order.
v)
Loan Disbursement

Funds will be disbursed to the borrower directly by BDC unless your assistance is specifically
requested prior to disbursement. Prior to disbursement we will require you to submit:
 Written/faxed confirmation that security taking has been completed and registered;
 Confirmation on priority of registration of BDC charges on land, if applicable; and;
 Your final account.
vi) Your Account

Your account, when received at the same time as your confirmation that security is complete, will be
paid from loan funds. Subsequent to disbursement you must collect any outstanding amount directly
from the client. We require a copy of your account in all cases.
5 Equipment Line Loans
The Instructing Letter may indicate that we have authorized an Equipment Line Loan (EL Loan). Such
loans may be processed separately or concurrently with a regular term loan. An EL Loan establishes
a loan facility that can be drawn upon by the borrower over a period of 12 months to facilitate the
purchase of specific items of equipment. Normally the equipment purchased under the EL Loan will
not be identified at the time the security is prepared and registered. However, you may occasionally
receive equipment lists relating to equipment financed under an EL Loan. When that happens, you
will need to assess BDC’s priority in respect of the listed equipment, as described below.
As to EL Loans only, where there is a conflict between this section and requirements elsewhere in this
document, the requirements of this section govern.
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i)
Searches/Registrations
(The special requirements for Small Loans contained elsewhere in these Service Standards, do not
apply to EL Loans.)
For all EL Loans, you will obtain the security called for in the Letter of Offer relating to the EL Loan and
will complete all Corporate and PPR searches required in that regard. You must either register a GSA
or confirm that BDC has an existing GSA that is properly registered and enforceable against the
Borrower’s assets. In addition, you must specifically determine whether BDC has priority on
equipment that may be financed by BDC under the EL Loan in the future.
At the time that you are instructed to prepare security, you may receive a list of equipment, prepared
by BDC, which is being financed in connection with an EL Loan. If so, you must not only determine
whether BDC has priority on future equipment that may be financed under the EL Loan (as outlined
above), but you must also complete such additional searches and registrations as are necessary,
including registrations against any ‘serial numbered goods’ (as defined in applicable PPSA legislation),
to confirm that BDC has a first security interest on the specific equipment shown on BDC’s list.
You are not expected to negotiate priority agreements in connection with EL Loans. However, using
the Security Confirmation form described below, you must provide BDC a list of all creditors that may
have priority over equipment financed by BDC under the EL Loan, including both future equipment
purchases and any equipment shown on BDC’s equipment list.
ii)
Loan Disbursement
You will not be involved in the disbursement of EL Loans. All disbursements on EL Loans will be
handled directly by BDC’s Security & Disbursement Group.
iii) Security Confirmation
Immediately upon execution and registration of the security required in the Letter of Offer relating to an
EL Loan, you will prepare a Security Confirmation form and send it by email to the BDC representative
from the Security & Disbursement Group who instructed you on the EL Loan. The “Security
Confirmation – Equipment Line Loan” form can be downloaded from our website at:
[www.bdc.ca/forms].
When completing the Security Confirmation form you must check all boxes that apply to a particular
loan. In general terms, we require that you indicate whether BDC has priority on the goods listed in
any BDC equipment list that has been provided to you, and whether BDC has priority on all other
equipment that may be financed under the EL Loan in the future.
In the Security Confirmation form you must provide a list of all creditors that may have priority over
BDC’s security interest in equipment. You should only list creditors with general registrations ahead of
BDC, or subsequent general registrations that have priority over BDC by operation of an existing
priority agreement. You are not required to provide a list of item specific registrations or serial
numbered goods unless such registrations are an exact match to pieces of equipment shown on an
equipment list that has been provided to you in connection with the EL Loan.
Your Security Confirmation will be relied upon by our Security & Disbursement Group to prepare and
obtain item specific waivers/priority agreements from the creditors that you have identified as having
priority over BDC’s security interest.
iv) Insurance
You verify insurance coverage on EL Loans in the same manner that you would for any other loan.
Those requirements are set forth in the Insurance Section of these Service Standards.
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v)
Solicitor’s Report
You will issue your Solicitor’s Report and deliver the security documentation for the EL Loan as soon
as possible after security is complete. This should be done regardless of whether the loan has been
disbursed. Please follow the standard reporting procedures contained in these Service Standards.
vi) Solicitor’s Account
The EL Loan Program requires that BDC pay the legal costs associated with obtaining security for,
and disbursing the EL Loans. Accordingly, you will render a separate invoice to BDC for the costs
associated with the preparation and registration of security for the EL Loan. That invoice will be paid
directly by BDC and you should not deduct the costs associated with the EL Loan from any
disbursement made to the borrower. Your invoice for the EL Loan should be submitted for payment to
the representative of BDC’s Security and Disbursement Group who instructed you.
In the event you are concurrently instructed to complete an EL Loan and a Term Loan, you will invoice
BDC for the EL Loan and deduct your fees and disbursements for the Term Loan when that loan is
disbursed.
6 Loan Disbursement
Prior to the release of any funds to you, BDC requires notice in writing (e-mail or fax are acceptable)
that the security called for in the Letter of Offer is complete, in accordance with BDC instructions.
Funds will be released to you on your request, but should only be requested if you are in a position to
disburse them to the client immediately. Any delay in the release of funds must be reported to the S&D
Officer as early as possible.

Conditions Precedent– Satisfaction of conditions precedent is generally dealt with directly
between the S&D Officer and the borrower but must be satisfied prior to disbursement so you
should confirm this with the S&D Officer before requesting funds.

Conditions Precedent Contract Review – The Letter of Offer may require review of a lease,
franchise or other agreement to be satisfactory to BDC’s lawyers or BDC’s legal advisors. We are
expecting you to conduct this review and advise as to the basic outline and effect of the contract,
whether it is consistent with the terms of the loan’s “Project and Financing”, security and
underlying conditions and conditions precedent as set out in the Letter of Offer and if there are
any unusual terms that would negatively affect the BDC’s position.

Except for “Fast Track” disbursements, loans will normally be disbursed through your office and
funds will be wired to you in trust. Please provide the S&D Officer with a voided trust account
cheque to provide account information for the transfer.

Fast Track refers to the early advance of part of the loan directly from BDC to the borrower prior
to the security being completed. In this case a promissory note is taken by BDC and held
temporarily until the security is complete. This is only done on some loans and may be referred to
in an underlying condition in the Letter of Offer.

At the time each loan disbursement is wired or otherwise delivered to your office, you will receive
a covering letter from BDC that may contain additional specific instructions. In the event of a
discrepancy between that letter and these instructions, that letter will govern.

Any use of the borrowed funds or any request that you direct funds in a manner not in
accordance with the “Project and Financing” set out in the Letter of Offer must be reported to the
S&D Officer in writing immediately.

Loan proceeds used to repay existing BDC loans will be applied internally by journal entry. No
cheque will be issued for such amounts.

Proof of Borrower’s Contribution – If the borrower provides you with a cheque representing
part of the “Project and Financing”, as set out in a Letter of Offer, please forward us a copy, as we
require it to satisfy our preconditions to disbursement.
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7 Reporting
i)
Form of Report
BDC’s form of Solicitor’s Report must be used in all cases unless another form is otherwise previously
approved by Legal Services. Please go to www.bdc.ca/en/lfb_30 to download the report.
Where existing GSA’s or existing mortgages are used, they are to be referred to in the Solicitor’s
Report.
ii)
Prior Charges
We require the Solicitor’s Report to opine as to the priority of registration of BDC’s charges as
against other registered charges, to indicate which prior registered charges are to remain outstanding
(must be permitted) and which are to be discharged. BDC recognizes that you cannot certify as to
priority over personal property absolutely given the uncertainty of title in personal property and
unregistered claims that might appear, but we do expect you to do the usual searches as you deem
necessary and to address any registered encumbrances or liens encountered.
It is not acceptable to attach a PPR search and advise that BDC security is subject to the charges
listed. You are to do that analysis and confirm that our security is in the required priority of registration
given the dates and terminology of the registrations located.
If BDC has been provided with a Solicitor’s Report reciting that certain encumbrances are to be
discharged before the security is complete, we must as soon as possible thereafter be provided with
your confirmation of their discharge or a letter of no further interest as may be appropriate.
iii) Opinions - Corporations, Partnerships and Trusts


Traditional opinions as to capacity, authorization and execution are required for corporations and all
non-corporate entities (partnerships, trusts, etc,) where the loan amount (total of all concurrent loans
instructed to you) exceeds $5,000,000. However, when the total of all concurrent loans does not
exceed $5,000,000, we do not require the traditional opinion. This is intended to reduce cost and time
and to eliminate the practise of asking borrower’s counsel to provide a certificate on these points. In
such circumstances, and absent any contrary knowledge, you will limit your investigation of capacity
and authorization:

for corporate borrowers or guarantors to:
i.
Officers Certificate confirming incumbent officers and signatories and confirming there are
no proceedings for winding up;
ii.
Searches of the provincial/territorial corporate registry and, to the extent locally possible,
certificates from those registries confirming the corporation’s incorporation, status and
directors and officers; and
iii.
Certified copy of Director’s Resolution approving the transaction.

for borrower or guarantors constituted as partnerships or trusts to:
i.
A review of the Partnership/Trust Agreement;
ii.
Searches of the provincial/territorial registry and, to the extent locally possible, certificates
from those registries confirming the partnership’s registration; and
iii.
Statutory declaration from the partner/trustee confirming that the partnership/trust
authorizes the loan, has capacity to provide the requested security and to stand as a
borrower or guarantor on the loan, and confirming the name of the person authorized to
execute the loan documents to bind the partnership/trust.
Corporations, Partnerships and Trusts not granting security – Where a corporation, partnership
or trust is a borrower or guarantor, jointly or individually, under the Letter of Offer but is not granting a
mortgage, general security agreement or other security, we would still expect the
corporate/partnership/trust opinion issue to be addressed in accordance with this section.
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iv) Foreign Corporations

Given the high cost of obtaining opinions relative to foreign corporations, you are to discuss with the
S&D Officer whether such opinions are required on a particular loan. You may take their written
direction on this point but must refer to it in your Solicitor’s Report. In any case where we are taking
security over foreign assets we will want confirmation of enforceability which may require opinions
from foreign counsel. If foreign counsel is required, please see Section 8 i) Multiple Jurisdictions
below.
v)
Delivery of Security Documents and Report
Format
We require both paper and electronic versions of the completed security documents, together with a
copy of your account, to be delivered to BDC not later than 30 days after the date of your first
request for disbursement of the loan. If all of the security documents have not been finalized within
that time frame, the available documents should be sent to BDC, and additional documents delivered
as they are available (e.g., State of Title Certificates, updated PPR registrations, surveys, insurance
confirmation etc.). When there are multiple disbursements on a loan, an interim account should be
issued to the Borrower, and a copy should be delivered to BDC together with the security package.
We do not require delivery of subsequent disbursement accounts.
Delivery to Legal Services

Paper: the originals of all security documents bearing signatures unless registered, in which case a
copy showing registration particulars will suffice along with your Solicitor’s Report, to the following
address:
Business Development Bank of Canada
Legal Services
121 King Street West, Suite 1200
Toronto, ON M5H 3T9

Electronic – all security documents, including all reporting documents such as your Solicitor’s Report,
your account and the covering letter for the security package, in PDF format (one document per PDF)
to the following address:
legalcfsc@BDC.ca
o
o

If you are instructed for multiple loans, send the security documents using a separate email
for each loan multiple
The subject line of your e-mail must include:

Borrower’s name

Account number and loan multiple (one per email)

Instructing Business Centre or Department
Electronic Files Naming – there no longer is a mandatory requirement to include the account or
multiple number in the name of the document. There also is no longer a mandatory requirement for
the use of abbreviations for the type of document. All security documents should be named using the
following naming convention:
i.
Type of document (e.g., GSA or General Security Agreement or any other version as long
as the document type is easily identifiable to BDC)
ii.
Only if there are multiple documents of the same type for the specific loan multiple (e.g., 2
GSA’s or 2 Guarantees), indicate the name of one of the parties to the document
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
NOTE: Original Letter of Offer
BDC will sometimes proceed with a loan based on a faxed copy of the accepted Letter of Offer. If the
S&D Officer advises you they have not received the original, please ensure that it is obtained and
forwarded to the S&D Officer.
vi) Your Account
You are to recover your fees and disbursements from the loan disbursements or directly from the
borrower before releasing the final disbursement. Unless specifically otherwise approved, BDC will
not pay your account. We require a copy of your account in all cases.
8 Loan Amendments
From time to time, amendments to our loans will require that supplemental security be prepared. We
will send you an Instructing Letter enclosing the amendment requiring the supplemental security, as
well as any other documents you may need to prepare the additional security.
In accordance with our reporting requirements in Section 7, we require both paper and electronic
versions of the completed security documents and the Solicitor’s Report not later than 30 days after
the security has been completed. Please indicate in the Solicitor’s Report which sections are not
applicable to the completed security.
The outstanding balance of all loans being amended will be provided in the Instructing Letter. Where
the total outstanding balance exceeds $5,000,000, you are expected to provide opinions as to
capacity, authorization and execution for corporations and all non-corporate entities (partnerships,
trusts, etc.) granting the supplemental security required by the loan amendment. Do not provide
opinions for any other loan parties.
You are to recover your fees for all amendment work directly from the borrower or the borrower’s
solicitor, as there will be no loan disbursement from BDC for amendments. You do not need to send a
copy of your account for loan amendment work with your Solicitor’s Report.
PART II –Security Taking Topics – Atlantic and Ontario
9 Miscellaneous Topics
i)
Multiple Jurisdictions
Where you are instructed to take security on a loan where there is security in more than one province
we anticipate you will use local law firms as required but look to you to ensure the required security is
taken. BDC will not instruct firms in each jurisdiction.
Where you are instructed to take security on a loan where a foreign corporation is giving security and
a foreign opinion is required, we anticipate that you will use local law firms as required but look to you
to ensure the required security is taken. BDC will not instruct a firm in the foreign jurisdiction. The
exception to the foregoing is if BDC’s loan is to specifically finance a project in the U.S, in which case,
we will require that specific U.S. counsel be used. If the loan falls into this category, the S&D Officer
will advise you and provide you with the contact information for the U.S. counsel to be used.
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ii)
Insurance on Assets
The Letter of Offer sets out the required insurance policies and terms thereof (if any). Although the
borrower is required to insure its assets for their full insurable value under the terms of the Letter of
Offer, we do not require you to verify insurance is in place in all cases. You are required to verify
insurance for all charged assets for loans over $500,000. For loans up to and including $500,000, you
are only required to verify insurance for:



Buildings;
Aircraft; and
Marine vessels.
A certificate of insurance issued to BDC for each applicable type of insurance is required prior to the
first disbursement. The name on the certificate(s) must match the name of the customer (or
guarantor owning the secured assets). The address and descriptions of insured property(ies) must
match the addresses and descriptions of assets pledged as security. The certificate(s) of insurance
must include the following general information:
1.
3.
5.
7.
9.
Name of insured
Type of policy
Policy number
Limit of coverage
Broker’s name/contact information
2.
4.
6.
8.
Name of insurer
Description of insured property
Policy term
Amount of deductible
Forwarding Insurance Certificates
Please forward to the S&D Officer certificates or policies relating to aircraft or marine vessels as soon
as possible. For all other types of insurance, a copy of the certificate of insurance must be included
with delivery of the security documents and your report to Legal Services.
BDC’s requirements for the applicable types of insurance are as follows:
PROPERTY (building and equipment):
This insurance is required when BDC has taken realty, equipment and/or business inventory as
security. Coverage must include:
 Building and equipment insured on an “All Risks or Broad Form”, full “Replacement Cost” basis
 BDC included as Mortgagee as its interests may appear
 “Standard Mortgage Clause (Approved by the Insurance Bureau of Canada)” in favour of BDC for
all realty (buildings)
 BDC included as Loss Payee for equipment/contents as its interests may appear
 30 days prior notice of cancellation clause in favour of BDC. The clause is acceptable even if only
“endeavour to provide”
Note: Condominiums – Insurance should be confirmed both for the building policy held by the
condominium corporation and for the owner’s policy for the contents but BDC is only required to be
named as loss payee on the owner’s policy
EQUIPMENT BREAKDOWN (Boiler & Machinery):
This insurance is required when a building pledged as security has pressure vessels for heating
and/or other process machinery and equipment. Coverage must include:
 Standard Comprehensive All-Risks or Broad Form, Repair or Replacement Cost basis
 BDC included as Loss Payee as its interests may appear
 30 days prior notice of cancellation clause in favour of BDC
BUILDERS’ RISK OR COURSE OF CONSTRUCTION:
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This insurance is required to cover loss or damage to buildings while they are under construction for
construction loans. The construction contract should specify which party is responsible for procuring
the insurance; it can be the future owner of the completed building, the project manager or the general
contractor. Coverage must include:
 Building and equipment insured on an All Risks or Broad Form, Soft Costs, Replacement Cost
basis
 BDC included as Mortgagee as its interests may appear
 Standard Mortgage Clause (approved by the Insurance Bureau of Canada) in favour of BDC for all
realty (buildings)
 BDC included as Loss Payee for equipment/contents as its interests may appear
 30 days prior notice of cancellation clause in favour of BDC
Note: The amount of insurance should reflect the construction costs as well as the soft costs such
as architectural and engineering fees. Evidence of property insurance is required once
construction has been completed.
TRANSPORTATION RISK (CARGO):
This insurance covers loss or damage to property while in the course of transportation and is required
when BDC calls for a charge on equipment and the amount disbursed on equipment in transit will
exceed $500,000. Coverage must include:
 Property transported and insured on an All Risks, Replacement Cost basis, including loading or
unloading, covering any and all modes of transport used
 Property transported by marine vessels shipped “under deck”
 BDC as Loss Payee as its interest may appear
 30 days prior notice of cancellation clause in favour of BDC (not relevant if the coverage is
arranged for a single voyage or trip and is imminent)
MARINE:
This insurance is required when a marine vessel is pledged as security. A copy of the certificate of
insurance must be provided to the S&D Officer for forwarding to our Enterprise Risk Management
Department – Insurance for review prior to disbursement. Coverage must include:
 Marine vessels insured for full value of the vessel under a Standard Hull & Machinery insurance
clause in customary use for the occupation of the vessel
 BDC included as Loss Payee as its interests may appear
 Mortgagee Interest Clause in favour of BDC (required for vessels with a Current Liquidation Value
(CLV) ≥ $500,000). The S&D Officer can advise you as to the CLV)
 Protection & Indemnity (third party liability) coverage in the minimum amounts of:
o $1,000,000 for pleasure craft
o $2,000,000 for commercial use
o or as required by Transport Canada or as specified in the Letter of Offer
 BDC included as an Additional Insured (should be requested but may not be available if the vessel
insured through a P&I - protection & indemnity club)
 30 days prior notice of cancellation clause in favour of BDC. The clause is acceptable even if only
“endeavour to provide”
AVIATION:
This insurance is required when an aircraft is pledged as security. A copy of the certificate of
insurance must be provided to the S&D Officer for forwarding to our Enterprise Risk Management
Department – Insurance for review prior to disbursement. Coverage must include:
 Aircraft hull insured on an “All Risks” basis for the full value of the aircraft
 Hull War Risk and Related Perils (required if aircraft operated outside Canada/USA)
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
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Insurance to include “In-Flight” coverage
Third Party Liability (including passenger) coverage in the minimum amounts of: (refer to Aircraft
Schedule B – General Security Agreement):
o $1,000,000 for private aircraft
o $2,000,000 for commercial use plus $1,000,000 per passenger
o or as required by Transport Canada or as specified in the Letter of Offer
BDC included as an Additional Insured (should always be requested but may not always be
available for small private aircraft)
Breach of Warranty clause in favour of BDC
BDC included as Loss Payee as its interests may appear
30 days prior notice of cancellation clause in favour of BDC. The clause is acceptable even if only
“endeavour to provide”
BDC will accept AVN67C or AVN28B or equivalent
Note: Breach of Warranty clause provides protection to BDC similar to the Standard Mortgage
Clause in Property insurance. AVN67C and AVN28B are endorsements available in the London
market for leased/financed aircraft. AVN67C is used for Airline operations while AVN28B applies
to commercial general aviation risks. They include the Loss Payee, Breach of Warranty, and
cancellation clauses. AVN67C also includes Additional Insured clause for financiers. If aircraft is
grounded, coverage must include liability insurance for ground risk. This is referred to as Static
Liability.
AVIATION GENERAL LIABILITY:
Clients that operate aircraft hangars that provide fuelling, maintenance and/or repair services to third
parties must provide evidence of this insurance. Coverage must include:
 $1,000,000 limit of Hanger Keepers liability per occurrence or the maximum value of aircraft in the
hangar at any one time
 Aviation Products Liability in the minimum amount of $1,000,000 per occurrence and in the annual
aggregate
 BDC included as an Additional Insured
 30 days prior notice of cancellation clause in favour of BDC
MOTOR VEHICLES:
This insurance is required when motor vehicles are pledged as security. Coverage must include:
 “All Risks” physical damage or “Collision and Comprehensive” coverage
 Automobile liability in the minimum amount of $1,000,000 per occurrence
 Lien Holder Endorsement naming BDC as Loss Payee (should be requested but may not always
be available – e.g., government owned car insurance entities will not typically provide this)
 30 days prior notice of cancellation clause in favour of BDC. The clause is acceptable even if only
“endeavour to provide”
iii) Insurance When Commitment over $25 million
With the exception of life insurance, you are not required to confirm satisfaction of BDC's insurance
requirements where, after disbursement of the subject loan, the amount owing by the Borrower under
all loans from BDC will exceed $25 million. BDC’s insurance department will handle these cases and
the Borrower will be required to provide insurance certificates or copies of the policies for review. If
you receive these certificates or policies, please forward them to the S&D Officer as soon as possible.
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iv) Insurance Confirmation Checklist
The S&D Officer gives the borrower an Insurance Confirmation Checklist which the borrower can take
to his insurers to simplify placing insurance. This checklist will normally not come to you but if it does,
it should not be considered as a change in instructions. The insurance called for in the Insurance
Confirmation Checklist should be the same as in the Letter of Offer as amended, but in the event there
is a difference, we expect you to meet the requirements of the Letter of Offer rather than the Insurance
Confirmation Checklist.
v)
Life Insurance
When life insurance is required, we require that you arrange for the execution of a notice of
assignment form, and the registration of same with the Insurer. The Insurer's form may be used
provided it does not contain unreasonable restrictions.
vi) Prior Permitted Charges on Land or Personal Property
You are expected to conduct priority searches and confirm the priority of registration of the charge.
Where we permit a prior charge up to a dollar amount, we require you to satisfy yourself and confirm
to us that the prior charges do not and cannot in the future exceed the permitted amounts (except for
interest and costs of enforcement). A priority agreement to restrict the priority of future advances may
be required. If your searches reveal the following types of charges that are not specifically permitted
by the security description in the Letter of Offer, they are to be treated as follows:
REAL PROPERTY
Charge
Treatment
Utility easements or rights-of-way to utility companies
(hydro, telephone, sewer or governments, etc.)
No action required
Under surface mineral rights in the crown or third
parties
Private easements or rights-of-way for access to
Charge to be postponed or loan amendment
adjoining lot, encroachments, etc.
permitting priority
Governmental restriction on use of property not
Solicitor is to advise, in writing (letter or e-mail),
arising from dealings with the property owner (e.g.
to the S&D Officer as to nature and effect of the
flood plain agreement, height restriction)
charge and advise if it does or does not
unreasonably affect the use or saleability of the
Governmental building approval – restricts use to
property. If it does not, nothing further is
particular construction may require posting of bonds,
required. If it does, commentary as to the effect
construction target dates, penalties
is to be provided so that the BDC can assess
Developer’s building restrictions
and, if approved, prepare a loan amendment.
Other covenants and restrictions
Leases of land or buildings
Lease to be postponed/discharged or loan
amendment permitting priority
Non-disturbance agreement
Authorization required by loan amendment
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PERSONAL PROPERTY
Charge
Treatment
Other charges only on inventory and/or receivables
No action required except if our loan is a subwhere we have already allowed priority to operating
debt loan in which case loan amendment
lender
required to permit
Leases and conditional sales agreements of specific Solicitor is to provide list of leased/sold
equipment
equipment for sign-off by Field Management
level of authority
Other charges on vehicles only
Solicitor is to provide list of leased/sold
equipment for sign-off by Field Management
level of authority
Other charges on specific equipment or other
personal property
Other general charges by Hypothec or GSA on a
Charge to be postponed/discharged or loan
class of assets or all movables/personal property
amendment permitting priority
Judgements, governmental or other liens and writs
of execution registered in PPR
vii) Searches
We require you to make all necessary searches to establish the priority of registration of our security.
Ownership searches of charged vehicles should be made where possible. For searches not
specifically identified on the following chart, we expect you will perform such other searches as may
be necessary based on the standards of practice in your area.
SEARCH
PPR/PPSA
LTO/LRO
Real Property Tax
Company Office
Worker’s Compensation
SST/Sales Tax
Executions
Manufactured Home
Registry
Canada Shipping
REQUIRED
when personal
property charged
when real
property interest
charged
SEARCH
Employment
Standards (wages)
Bank Act
when land
charged
yes
no
no
Zoning
Revenue Canada
Actions / judgments
Condominium fees
Aircraft registration
with Transport Canada
Certificate of air
worthiness
International Aircraft
Registry
Municipal by-law
search
Bankruptcy
when land
charged
as applicable
as applicable
REQUIRED
No
where nature of
business indicates and
we have not
subordinated our
position on inventory
No
No
No
where lot charged
where aircraft charged
Yes
where applicable
No
No
NOTE: In any particular case you feel it would be wise to effect a non-mandatory search due to the
particular facts of the file please discuss that with the S&D Officer.
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viii) Landlord’s Undertakings and Waivers of Distraint
We expect you to attend to obtain BDC’s standard form of waiver or undertaking as may be called for
in the Letter of Offer. Some lessors however, such as federal and provincial departments and their
agencies, crown corporations, some large shopping centres and corporations such as C.P. Rail have
their own forms and the S&D Officer will require your assistance in assessing its suitability.
ix) Loans to Corporations to be Incorporated (TBI’s)
In many cases, the only document signed by the borrower that contains the terms of a particular loan
is the Letter of Offer. Where a corporation, intended to be a borrower, does not exist at the time the
Letter of Offer is accepted, we require a subsequent written adoption of the Letter of Offer from that
corporation and its acceptance of the terms of the loan.
x)
Share Purchases
In many cases, the target corporation is to be a borrower or guarantor under a loan providing funds to
buy the shares of that corporation. In the event the Letter of Offer has not been signed by the
company under its incumbent officers, then you must ensure that it is adopted and confirmed by the
corporation by the authorized signatories at closing.
10 MORTGAGES OF LAND
i)
Taxes
Where an interest in land is mortgaged, realty taxes up to the end of the previous year and all current
year’s taxes which have been billed and are due as of the date of the initial disbursement must be paid
prior to initial disbursement.
If the loan is being disbursed in stages over the current year, the taxes for the current year must be
paid proportionally to the date of the final disbursement or at least to ascertain that the current taxes
are paid in accordance to the schedules allowed by the municipalities if the last disbursement occurs
after these schedules.
We will rely on you to this end and do not require further documentation or certificates. Please provide
confirmation in your solicitor’s report.
ii)
Readvanceable Mortgages
There is no special form for a “readvanceable” mortgage. The BDC’s regular mortgage is a
“readvanceable mortgage”. In Ontario, the Schedule “A” and the filed Standard Charge Terms no.
20011 cover the issues raised by the “readvanceable” mortgage. In Newfoundland, Nova Scotia and
P.E.I., all readvanceable provisions are contained in the BDC’s standard mortgage document. In New
Brunswick, Optional Mortgage Covenant # BDBC- 538 addresses the issues raised by the
“readvanceable” mortgage.
The readvanceable mortgage is intended to benefit borrowers by enabling the BDC to avoid
reproducing the mortgage security in the event of future loans. However, there is no obligation on the
BDC to make further loans to the borrower.
iii) Existing Readvanceable Mortgages
If the BDC already holds a readvanceable mortgage for an existing loan, the security section in the
Letter of Offer for the new loan may state: “Existing first readvanceable mortgage in the principal
amount of $_______ will stand as security for this loan.”
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 We expect that you will review the existing mortgage, and amend or replace it only if necessary by
reason of some apparent error or deficiency in its preparation, execution or registration, or if
necessary to add additional properties. In particular, please review the existing mortgage and
ensure that the total outstanding commitment by the BDC (balance outstanding on any prior
loan accounts secured by the existing mortgage plus the total amount of the new loan) does not
exceed the principal amount stated on the existing mortgage. The total commitment amount can
be obtained from the S&D Officer.
In some cases old form or irregular mortgages may have been used after introduction of the
readvanceable form. The existing mortgage must be examined in all cases.
 We expect that you will perform the necessary subsearch of title, obtain a clear execution
certificate, and obtain evidence of payment of realty taxes. If the mortgaged property is a
condominium, a new status/estoppel certificate is required, unless there is an existing lender’s
policy issued by First Canadian Title, Stewart Title or Chicago Title from the time of registration of
the existing mortgage.
 Where a mortgage to another lender has been registered subsequent to our existing mortgage and
prior to our supplementary loan for which you have been instructed, we will rely on your advice as
to the priority of our new advance and as to whether we require a registered postponement or a
priority agreement from the intervening lender to achieve the desired priority position.
 Refer to the mortgage in your report – You will not be responsible for any defects in preparation,
execution or registration that are not patent. Any that are, should be addressed.
iv) Existing Readvanceable Mortgages – Survey Review
If the survey submitted at the time of the registration of the existing readvanceable mortgage is more
than 10 years old at the time of the new loan, or if there has been an alteration, addition or demolition
to the structure(s) shown on the survey, or if there is an existing lender’s title insurance policy issued
by an insurer other than First Canadian Title, Stewart Title or Chicago Title, then we will require either
a new survey, or a new lender’s title insurance policy. If there is an existing lender’s title insurance
policy in favour of BDC issued by First Canadian Title, Stewart Title or Chicago Title for the existing
readvanceable mortgage, a new title insurance policy is not required (see section “Surveys and Title
Insurance” below in this Service Standards document).
v)
Mortgage Not on Demand
While our mortgages may contain language such as “on demand”, they are not demand loans. As is
further provided in each mortgage, the Letter of Offer governs each loan and default is required before
a loan will be called.
vi) Capped Mortgages
When BDC expects to make a further loan to the Borrower, BDC may wish to take a “capped”
mortgage which states a higher principal amount than that set out in the Letter of Offer. The actual
principal amount for the new loan is governed by the Letter of Offer.
If BDC has called for a “capped” mortgage, the amount of the “cap” or stated amount of the mortgage
will be expressed in the Letter of Offer as follows:
“First readvanceable mortgage in the principal amount of $________. “ This amount will be greater
than the loan amount.
If there is no principal amount stated for the mortgage in the security section of the Letter of Offer, you
can conclude that the BDC is taking a “regular” mortgage where the amount of the mortgage and the
loan amount are the same.
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The capped mortgage is intended to benefit Borrowers by enabling BDC to avoid reproducing the
mortgage security in the event of future loans. However, there is no obligation on BDC to make
further loans to the Borrower.
There is no special form for a capped mortgage.
For Newfoundland only, please attach an affidavit stating the amount of the actual advance. This
should result in the recording costs being based on the amount of the advance, not the “capped”
amount.
vii) Mortgage of Lease
For the mortgaging of a leasehold interest in land, a copy of the lease must be provided, as well as the
landlord’s consent, in writing, to the mortgage (if required by the lease). The BDC does not provide a
leasehold consent form and accordingly, this must be drafted by you.
i.
Ontario
There is no separate form for leasehold mortgages. Use the statutory form for the Charge/Mortgage
of Land with the filed Standard Charge Terms.
ii. Atlantic Canada
There is no separate form for leasehold mortgages. The standard mortgage can be used to charge
freehold as well as leasehold.
viii) Ontario Mortgage Forms
i. Mortgages in Electronic Format
The following special instructions are to be used for electronic mortgages in those jurisdictions where
electronic registration is in place.
Attach the BDC’s Schedule “A” (MTG-ONT-Readvanceable (E-REG)). An electronic version of the
Schedule (Mortgage Schedule A (oct01).pdf) may be obtained from the Teranet web site.
Insert the appropriate number for the BDC’s Standard Charge Terms filed in Ontario - S.C.T. no.
20011. Do not attach a schedule for the repayment terms. There should be no guarantor for the
BDC’s mortgage, even if the Letter of Offer calls for a guarantor of the loan.
Reporting requirements: please provide an original signed Acknowledgment and Direction addressed
to the BDC.
Please complete the “Payment Provisions” fields of the electronic Charge as follows:
Principal Amount - enter the principal amount of the loan, or for a mortgage collateral to a guarantee,
enter the amount of the guarantee.
Payments – delete all of the figures so the field is blank in the registered Charge.
Interest Rate - enter “Schedule A”
NOTE: RE: INTEREST RATE: The mortgage is intended to secure all present and future liabilities
and indebtedness of the borrower. In order to provide protection for the BDC in the event of an
increase in interest rates payable under the various debt instruments, we require that the Interest
Rate on the mortgage (refer to Schedule A) be shown as the BDC’s floating interest rate plus
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10%. Although we are secured for a higher interest rate, we are entitled only to interest as
determined by the rate in the Letter of Offer, or any other evidence of indebtedness which the
borrower may have entered into with the BDC at any particular point in time.
Insurance - enter “see Standard Charge Terms”.
For all other fields, enter “Schedule A” where appropriate.
An electronic assignment of rents is also available from the Teranet web site.
ii. Mortgages in Paper Format
Use the applicable statutory mortgage form (in Ontario - Charge/Mortgage of Land) and attach the
BDC’s Schedule “A” (i.e. MTG-ONT). Also, insert the appropriate number for the BDC’s Standard
Charge Terms filed in Ontario - S.C.T. no. 20011. Do not attach a schedule for the repayment terms.
Please complete the “Payment Provisions” box (9) of the statutory Charge/Mortgage form as follows:
Box (a) Principal Amount - enter the principal amount of the loan, or for a mortgage collateral to a
guarantee, enter the amount of the guarantee, or where the Letter of Offer specifies the amount of the
mortgage, enter the specified mortgage amount.
Box (b) Interest Rate - enter “see Schedule A”.
Box (c) Calculation period - enter “see Schedule A”.
Box (e) Payment Date and Period - enter “On Demand”
NOTE: Although we would prefer to leave this box blank, we are not permitted to do so by the Land
Registrar, who will only accept the mortgage for registration if that box is completed. Our choice would
be to either fill in the actual dates, or fill in the words, "On Demand". Since it is preferable to keep our
options open regarding payment dates to allow the BDC and the borrower the flexibility of changing
payment dates during the administration of the loan, we ask our solicitors to insert the words, "On
Demand." While this form requires a “demand” feature, it does not make our loans “demand
loans”. Each loan is governed by its Letter of Offer and default is required before a loan will be
called.
Box (j) Insurance - enter “see Standard Charge Terms”.
For all other boxes of the “Payment Provisions”, enter “xxx” to delete.
ix) Atlantic Mortgage Forms
There are two different mortgage forms; a readvanceable mortgage for the principal indebtedness (the
loan amount) and a readvanceable mortgage collateral to the guarantee. Both of our mortgage forms
are readvanceable. For collateral mortgages, as our form is now readvanceable, do not attach the
guarantee as a schedule to the registered mortgage.
Please ensure that whether using the readvanceable mortgage (taken as security from a Borrower) or
the collateral readvanceable mortgage (taken as security from a Guarantor), that the amount of the
registered mortgage reflects the amount required for the mortgage in the Security section of the Letter
of Offer. If no amount is indicated for the mortgage in the Letter of Offer, then the registered amount
must be equal to the amount of the Loan which calls for the new mortgage. The amount of the
registered mortgage should not be reduced based on the percentage amount of the guarantee.
In order to provide protection for BDC in the event of an increase in interest rates payable under the
various debt instruments, the interest rate on the Mortgage is shown as BDC’s floating interest rate
plus 10%. Although we are secured for a higher interest rate, we are entitled only to interest as
determined by the rate in the Letter of Offer, or any other evidence of indebtedness which the
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Borrower may have entered into with BDC at any particular point in time.
In New Brunswick, for the readvanceable mortgage from a Borrower, Optional Mortgage Covenants #
BDBC - 538 (BDBC- # 2424 in French) is included in the Mortgage Readvanceable form. An
assignment of rents has been filed as Optional Mortgage Covenants # BDBC- 483 (BDBC-#2423 in
French). For the collateral readvanceable mortgage from a Guarantor, Optional Collateral Mortgage
Covenants # BDBC – 2360 (BDBC-#2372 in French) is included in the Mortgage Collateral
Readvanceable form.
x)
Condominiums
If we are taking a mortgage on a condominium in Ontario, we require a status certificate. In Atlantic
Canada, we require an estoppel certificate. Alternatively, title insurance may be obtained in lieu of a
status/estoppel certificate.
Parking - please advise the S&D Officer, in writing, regarding the Borrower’s interest, if any, in parking
facilities. If the Borrower has acquired an interest in parking which can be mortgaged, the S&D Officer
may want to take a charge on that interest.
xi) Holdbacks for Construction Loans
BDC normally retains holdbacks from its disbursements on construction loans in Ontario until 45 days
after publication of a certificate of substantial completion in accordance with the Construction Lien Act.
However, strictly as a matter of BDC policy, BDC does not retain holdbacks on construction projects of
$500,000 or less (cost of the construction project component). BDC no longer retains holdbacks from
its disbursements on construction loans in New Brunswick, Newfoundland, Nova Scotia and Prince
Edward Island.
xii) Surveys and Title Insurance
You are to obtain and review a building location survey/ location certificate (in NF, a Surveyor’s Real
Property Report) or obtain title insurance where we call for a mortgage on land and buildings. BDC is
prepared to accept an existing survey provided that it is no more than 10 years old at the time of the
financing and shows all existing buildings (including additions) on the property. If the survey is less
than 10 years old, a statutory declaration from the owner stating that that there have been no
alterations, additions, or demolitions to the buildings or structures as shown on the plan since the date
of the survey should accompany the survey. However, if the survey is either more than 10 years old
at the time of the financing or less than 10 years old but does not show all existing structures, then
either a new survey or title insurance is required.
Title insurance is mandatory for construction loans in Ontario where the project is equal to or greater
than $1 million. For construction loans in Atlantic Canada (for any amount) or in Ontario for projects of
less than $1 million, we require either title insurance prior to the first disbursement or a survey once
the foundation is in place, which survey must be updated before the last disbursement to confirm no
above ground hanging encroachments
For non-construction loans, survey requirements must be fulfilled prior to first disbursement of the
loan.
Exceptions
 For some rural properties over 5 acres, the S&D Officer may accept a sketch plan drawn to scale
by the account officer or the borrower.
 Surveys are not required for registered condominium or strata lots, unless there is a bare land
condominium or strata plan.
 “Small Loans” as discussed in section 4 above.
 Surveys or title insurance are not required for vacant land unless BDC is financing a construction
project, in which case the instructions herein relating to construction loans are applicable.
Title Insurance
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
Where a survey/location certificate or status/estoppel certificate is required, title insurance from
First Canadian Title Insurance Company or Stewart Title Guaranty Company or Chicago Title
Insurance Company may be used instead at the borrower’s option and cost.
Please note that BDC does not accept title insurance in lieu of off-title searches, other than
defects disclosed by a building location survey.
Title insurance may be available to protect against known title defects such as encroachments and
BDC may be willing to accept this in a particular fact situation.
Please advise the S&D Officer in writing providing details of the title problem together with your
opinion that the problem can be appropriately covered by title insurance and further written
instructions will be provided. In any case where title insurance is used, we will expect you to be
satisfied that the policy obtained covers the risk(s) to be insured (survey, known defects).
In all cases, should BDC be prepared to accept title insurance, we require that the policy be issued
through First Canadian Title, Stewart Title or Chicago Title with BDC as the insured, for the amount
of the mortgage and for a term equivalent to the life of the loan. BDC will only accept title
insurance issued through First Canadian Title, Stewart Title or Chicago Title, as they provide a
special readvanceable endorsement for BDC mortgages (see section below re: Subsequent
Advances). Please do not request that another insurer provide the coverage.
CONSTRUCTION LOANS: Should the loan include a construction component, First Canadian
Title, Stewart Title or Chicago Title must be notified so the appropriate construction endorsement
can be added to the policy when it is issued. Title insurance is mandatory for all construction loans
in Ontario where the project is equal to or greater than $1 million.
First Canadian Title Insurance for Subsequent Advances
The Subsequent Loan Facilities Endorsement (see Schedule A for 04/10 revision – confirm with First
Canadian that you have the current version) is deemed included in First Canadian Title Insurance
when a new or existing readvanceable BDC mortgage form is used on an insured loan. Therefore, if
making a supplementary loan relying on an existing readvanceable mortgage for which a First
Canadian Title Insurance Company policy had been obtained as to an earlier loan, that policy can be
used for the new loan although some modification and additional fee is required in some cases as
follows:
1. Where the total amount of the new loan and existing loan(s) are less than the existing policy
amount:
a. no notice to First Canadian required;
b. you must follow the requirements of the Subsequent Loan Facilities Endorsement as to sub
searches, prior charges and payment of taxes. No confirmation of these searches, etc. is sent
to First Canadian but must be retained on your file.
2. Where the total amount of new loan and existing loan(s) are greater than the existing policy
amount:
a. First Canadian is to be advised as to:
 borrower;
 policy number;
 new insured amount (total amount of loans);
 date of advance of new monies
b.
An additional fee will be required based on the difference between the cost of a new policy for
the existing insured amount and a new policy for the new insured amount;
c.
You must follow the requirements of the Subsequent Loan Facilities Endorsement as to sub
searches, prior charges and payment of taxes. Confirmation of these searches, etc. is sent to
First Canadian as for a new policy;
d.
First Canadian will issue an amended policy where the amount of insurance will be increased
and the date of policy brought forward.
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Stewart Title Insurance for Subsequent Advances
The Subsequent Loan Facilities Endorsement (Special) 05/06/2008 revision (see Schedule B –
confirm with Stewart Title that you have the current version) is deemed included in Stewart Title
Insurance when a new or existing readvanceable BDC mortgage form is used on an insured loan.
Therefore, if making a supplementary loan relying on an existing readvanceable mortgage for which a
Stewart Title Insurance policy had been obtained as to an earlier loan, that policy can be used for the
new loan although some modification and additional fee is required in some cases as follows:
1. Where the total amount of the new loan and existing loan(s) are less than the existing policy
amount:
a. no notice to Stewart Title required;
b. you must follow the requirements of the Subsequent Loan Facilities Endorsement (Special) as
to sub searches, prior charges and payment of taxes. No confirmation of these searches, etc.
is sent to Stewart Title but must be retained on your file.
2. Where the total amount of new loan and existing loan(s) are greater than the existing policy
amount:
a. Stewart Title is to be advised as to:
 borrower;
 policy number;
 new insured amount (total amount of loans);
 date of advance of new monies
b.
An additional fee will be required based on the difference between the cost of a new policy for
the existing insured amount and a new policy for the new insured amount;
c.
You must follow the requirements of the Subsequent Loan Facilities Endorsement (Special) as
to sub searches, prior charges and payment of taxes. Confirmation of these searches, etc. is
sent to Stewart Title as for a new policy;
d.
Stewart Title will issue an amended policy where the amount of insurance will be increased
and the date of policy brought forward.
Chicago Title Insurance for Subsequent Advances
The Subsequent Loan Facilities Endorsement (see Schedule C – confirm with Chicago Title that you
have the current version) is deemed included in Chicago Title Insurance when a new or existing
readvanceable BDC mortgage form is used on an insured loan. Therefore, if making a supplementary
loan relying on an existing readvanceable mortgage for which a Chicago Title Insurance policy had
been obtained as to an earlier loan, that policy can be used for the new loan although some
modification and additional fee is required in some cases as follows:
1. Where the total amount of the new loan and existing loan(s) are less than the existing policy
amount:
a. no notice to Chicago Title required;
b. you must follow the requirements of the Subsequent Loan Facilities Endorsement as to sub
searches, prior charges and payment of taxes. No confirmation of these searches, etc. is sent
to Chicago Title but must be retained on your file.
2. Where the total amount of new loan and existing loan(s) are greater than the existing policy
amount:
a. Chicago Title is to be advised as to:
 borrower;
 policy number;
 new insured amount (total amount of loans);
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
date of advance of new monies
b.
An additional fee will be required based on the difference between the cost of a new policy for
the existing insured amount and a new policy for the new insured amount;
c.
You must follow the requirements of the Subsequent Loan Facilities Endorsement as to sub
searches, prior charges and payment of taxes. Confirmation of these searches, etc. is sent to
Chicago Title as for a new policy;
d.
Chicago Title will issue an amended policy where the amount of insurance will be increased
and the date of policy brought forward.
11 Personal Property Security
i)
Registration – Personal Property Security Act
Duration
As a general matter, financing statements are to be filed for a period equal to the “Maturity Date” of
the loan plus five years. Where this results in a registration period that would require an “infinity” or
“perpetual” registration, please do not register for infinity but instead register for the maximum fixed
term (usually 25 years) and then immediately extend the registration for the required number of years.
This avoids the heavy cost of an infinity or perpetual registration.
Execution
Your firm is authorized to execute Financing Statements and Financing Change Statements on behalf
of BDC.
Reporting
Please provide with your Solicitor’s Report the registered Financing Statement (Ontario) and the
Verification Statement (Ontario and Atlantic provinces).
Atlantic
It is not necessary to use a secured party code to effect a filing under the PPR. While the Bank used
to provide a code number in New Brunswick, this practice has been discontinued.
The collateral is to be described as: “All present and after acquired personal property.” In addition,
please ensure that any serial numbered goods (motor vehicles, trailers, aeroplanes etc.) are
specifically described in the financing statement. Please review the definition of serial numbered
goods under your legislation.
ii)
Equipment Lists
Equipment lists are generally provided by the S&D Officer and attached to the GSA. If no list has
been made available, confirm with the S&D Officer that the list has been waived. If the list is provided
directly by the borrower, please ensure that the list has the S&D Officer’s approval.
iii) Fixture Filings
We rely on you to determine whether fixture filings in Land Titles/Registry Offices are necessary.
iv) Assignments of Shareholder’s Loans and Guarantees
We do not require the registration of any financing statements in respect to
assignments/postponements of shareholder’s loans or guarantees.
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v)
General security Agreement (GSA)
GSA Form
Our GSA is intended to be unlimited in amount and to secure any number of loans. It is designed to
provide an all present and after acquired personal property charge. We also have instructions in the
“Tip Sheet” for the GSA form to create a Specific GSA for the rare cases where we call for a charge on
specific chattels only.
Joint GSA
One separate GSA is to be taken for each person or entity required to give one. This simplifies using
the GSA to secure other indebtedness, discharging individual borrowers and may ultimately save the
client money.
vi) Supplementary or Superseding Loans relying on Existing GSAs
When you are instructed for a loan where an existing GSA is to be used we expect you to:
 Review a copy of the existing GSA and any existing priority agreements – please obtain copies
from the S&D Officer if not already sent;
 Examine the GSA for patent defects (e.g., errors or omissions in completion or execution);
 Do searches to determine proper registration and no unauthorized registered prior charges based
on the priority required for the GSA in the new Letter of Offer. Search requirements in 7 above
apply;
 Add serial numbered good(s) if required;
 Extend registration period as required;
 Refer to the GSA in your report – You will not be responsible for any defects in preparation,
execution or registration that are not patent. Any that are should be addressed; and
 Confirm priority of registration in your Solicitor’s Report based on the security requirements in the
new Letter of Offer.
vii) Charges on Rolling Stock/Railway Equipment
Where BDC is taking security over rolling stock as defined under the Canada Transportation Act, we
will expect filing of our security agreement under that Act through the registry maintained by Industry
Canada as well as the appropriate provincial security registry filings. You are not expected to
automatically complete the federal filing when only a GSA is called for. If you think it is warranted in
any case, please discuss that with the S&D Officer.
viii) Intellectual Property
We have created a number of special security forms for use when requested, being:
Assignment of Copyright
Assignment of Trademarks
Assignment of Patents
Source Code Hypothecation
Where one of these forms is called for, we will expect filing of a notice of our GSA interest (not the
assignment or hypothecation) against the interest’s registration in the applicable federal registry as
well as the appropriate provincial security registry filings. You are not expected to automatically do the
federal filings when only a GSA is called for. If you think it is warranted in any case, please discuss
that with the S&D Officer.
ix) Charges on Aircraft at The International Registry for International Interests in Mobile
Equipment (Aircraft Equipment) (International Registry)
As of April 1, 2013, Canada implemented the Cape Town Convention on International Interests in
Mobile Equipment and the Aircraft Protocol to the Convention. As a result, BDC is now required to
register at the International Registry established under the Convention, an international security
interest (known as an “international interest” under the Convention) when financing airplanes and
helicopters of a defined size and airplane engines of a defined thrust capacity or horsepower (known
as “aircraft objects" under the Convention).
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The Letter of Offer will set out the Bank’s security requirements with respect to the Aircraft and will
indicate where our security interest should be registered, including reference to the International
Registry, if applicable. Such security requirements will include a security interest and international
interest in the aircraft and engine(s) and may include an assignment of any lease agreement with
respect to the aircraft. You are expected to confirm whether the aircraft qualifies for registration in the
International Registry. A loan amendment will be required if BDC has called for an International
Registration and you have determined that such is not necessary, or vice versa.
The security documents for aircraft financing are included with the Bank’s other security documentation
available on the Internet - www.bdc.ca/forms. Note that there are special forms of schedules to our
standard GSA required for aircraft. These schedules to the GSA are to be used regardless of whether
the aircraft will be registered in the International Registry or solely in the Personal Property Registry,
and the schedules must be reviewed and completed. A new GSA must be signed for all aircraft objects
that are to be registered in the International Registry after April 1, 2013. The new forms also include an
Assignment of Aircraft Lease Agreement and a Consent & Acknowledgment re Assignment of Aircraft
Lease for circumstances where an aircraft is subject to a lease permitted by BDC.
Where applicable, searches should be conducted in the International Registry and registrations
performed. You are also required to register in the applicable Personal Property Registries. If you are
not provided sufficient particulars to enable you to perform the necessary searches and registration,
please request such information from the S&D Officer.
You are responsible to confirm full satisfaction of all Conditions Precedents listed in the Letter of Offer,
including the requirement that the borrower and any permitted lessee of the aircraft be registered as
Transacting User Entities in the International Registry. If you or another individual at your firm is
registered as a Professional User Entity under the Convention, you may (a) act for both BDC and the
borrower as permitted by these Service Standards; and (b) act as agent for the borrower for
International Registry purposes, even if you are not counsel for the borrower.
If you or another individual at your firm is registered as a Professional User Entity under the
Convention, you may also prepare all required security documents and complete all necessary
provincial and international registrations on behalf of BDC. You will need to obtain authorization from
BDC’s IR Administrator (see below) to complete the international registrations.
If you or another individual at your firm is not registered as a Professional User Entity under the
Convention you may prepare all required security documents and complete all necessary provincial
registrations on behalf of BDC. However, if any international registrations are required you must retain
the services of BDC’s IR Administrator (see below) to complete those registrations. You will be
required to provide our IR Administrator copies of the signed security documents when requesting an
international registration.
BDC’s IR Administrator is the Calgary law firm of Parlee McLaws LLP. Please direct any inquiries to:
Ann Lowenberg
Commercial and Banking & Finance Paralegal
alowenberg@parlee.com
Parlee McLaws LLP
Barristers & Solicitors, Patent & TradeMark Agents
3400 Suncor Energy Centre
150 Sixth Avenue SW
Calgary, Alberta T2P 3Y7
Direct dial: (403) 294-7074
Fax: (403) 294-7082
Web site: www.parlee.com
Dale Spackman Q.C. or Naomi Nind of that firm are the backup contacts.
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Schedule A
Subsequent Loan Facilities - BDC
Loan
Canada (revised 04/10)
ENDORSEMENT
Attached to and forming a part of Title Insurance Policy No. 
Issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
2235 Sheridan Garden Drive,
Oakville, Ontario L6J 7Y5
Telephone: 905-287-3112 or 1-866-804-3112
1.
Amend Date of Policy: Subsequent Advances
On the creation of future indebtedness and liability up to the Amount of Insurance, other than
pursuant to advances contemplated by the Revolving Credit Operating Line Facility
endorsement, the Company will deem the Date of Policy to be the date of the creation of such
future indebtedness and liability, provided that, as of the date of the creation of such future
indebtedness and liability, the Insured:
(i)
(ii)
(iii)
2.
conducts a subsearch of the Public Records (including searching executions) and confirms
there are no liens, encumbrances or adverse interests registered against Title;
does not have actual Knowledge of any liens, encumbrances or adverse interests; and
confirms realty taxes are not in arrears.
Priority of subsequent advances: Date of Policy
The Insured acknowledges and agrees that on the creation of future indebtedness, other than
pursuant to advances contemplated by the Revolving Credit Operating Line Facility
endorsement, and if the Date of Policy is not deemed to be amended as provided for in
paragraph 1, the Company is not liable for any loss or damage sustained by the Insured by
reason of any matters covered under the policy arising or created subsequent to the Date of
Policy.
3.
Increasing Amount of Insurance
Additional indebtedness may be created by the mortgagor to an amount which exceeds the
Amount of Insurance and in such case, the Company will increase the Amount of Insurance to
the amount requested by the Insured, not to exceed the amount of the Insured Mortgage, and will
amend the Date of Policy to the date of the creation of such additional indebtedness and liability,
provided that, as of the date of the creation of such additional indebtedness, the Insured:
(i)
conducts a subsearch of the Public Records (including searching executions) and confirms
there are no liens, encumbrances or adverse interests registered against the Title;
(ii) does not have actual Knowledge of any liens, encumbrances or adverse interests;
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Subsequent Loan Facilities - BDC
Loan
Canada (revised 04/10)
(iii)
(iv)
4.
confirms realty taxes are not in arrears; and
agrees to pay the Company the premium at the then applicable rates for the increase in the
Amount of Insurance.
Limitation of Company’s liability
The Insured acknowledges and agrees that:
(i) in the event the total indebtedness of the mortgagor exceeds the Amount of Insurance and
the Insured has not increased the Amount of Insurance as provided for herein, the
Company’s liability for loss or damage arising from matters covered under the policy will be
limited to losses not exceeding the amount by which the value of the Land at the time of loss
falls below the Amount of Insurance; and
(ii) if the indebtedness of the mortgagor is increased at any time subsequent to the Date of Policy
so that the total Indebtedness of the mortgagor exceeds the Amount of Insurance and if the
Date of Policy is not amended as provided for herein, the Company is not liable for any loss
or damage sustained or incurred by the Insured by reason of any matters covered under the
policy arising or created subsequent to the Date of Policy
This endorsement is issued as part of the policy. Except as it expressly states, it does not
(i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii)
extend the Date of Policy or (iv) increase the Amount of Insurance. To the extent a provision of
the policy or a previous endorsement is inconsistent with an express provision of this
endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the
terms and provisions of the policy and of any prior endorsements to it.
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
Thomas H. Grifferty, Regional Vice President,
International Operations
Issuing Guidelines:
In order to issue the Subsequent Loan Facilities endorsement the Insured must comply with the
provisions stated in the endorsement. As to paragraph 1, it is not necessary to advise us of each
subsequent advance, but you must maintain a record of your searches (including confirmation of
taxes) and the date of each advance.
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Schedule B
ENDORSEMENT TO TITLE POLICY
Attached to and forming part of Policy No. M-7762
Charge $Nil
05/06/2008 – Loan
ISSUED BY
STEWART TITLE
G U A R A N T Y
C O M P A N Y
HEREIN CALLED THE COMPANY
SUBSEQUENT LOAN FACILITIES ENDORSEMENT (SPECIAL)
1.
Insurance covers all indebtedness and liability and payments do not reduce the Amount of
Insurance
The Company acknowledges and agrees that the Insured Mortgage secures all present and future
indebtedness and liability of the mortgagor up to the amount of insurance, as amended from time to time as
provided for hereunder (the “Amount of Insurance”) and that, notwithstanding the terms and conditions of the
policy and any endorsement, the Amount of Insurance shall not be reduced by payments made on any such
indebtedness and liability.
2.
Request to amend Date of Policy
On creation of future indebtedness and liability up to the Amount of Insurance, other than pursuant to
advances contemplated by the Revolving Credit Endorsement, the Company will deem the Date of Policy to
be the date of the creation of such future indebtedness and liability, provided that, as of the date of the
creation of such future indebtedness and liability, the Insured:
i) conducts a subsearch of the Public Records (including searching executions) and confirms there are no
liens, encumbrances, or adverse interests registered against the Title;
ii) does not have Knowledge of any liens, encumbrances or adverse interests; and
iii) confirms realty taxes are not in arrears.
3.
Priority of subsequent advances: Date of Policy
The Insured acknowledges and agrees that on the creation of future indebtedness and liability, other than
pursuant to advances contemplated by the Revolving Credit Endorsement, and if the Date of Policy is not
deemed to be amended as provided for herein, the Company is not liable for any loss or damage sustained
or incurred by the Insured by reason of any matters covered under the policy arising or created subsequent
to the Date of Policy.
This Endorsement is made a part of the policy and is subject to all the terms and provisions thereof and of any prior
endorsements thereto. Except to the extent expressly stated, this Endorsement neither modifies any of the terms and
provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and prior
endorsements, nor does it increase the face amount thereof. Signed under seal for the Company, but this Endorsement
is to be valid only when it bears an authorized countersignature, dated 7 March, 2016.
Countersigned:
Authorized Countersignature
Stewart Title Guaranty Company
Toronto, Ontario, Canada
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ENDORSEMENT TO TITLE POLICY
Attached to and forming part of Policy No. M-7762
Charge $Nil
05/06/2008 – Loan
ISSUED BY
STEWART TITLE
G U A R A N T Y
C O M P A N Y
HEREIN CALLED THE COMPANY
SUBSEQUENT LOAN FACILITIES ENDORSEMENT (SPECIAL)
- Page 2 4.
Increasing Amount of Insurance
Additional indebtedness and liability may be created by the mortgagor to an amount which exceeds the
Amount of Insurance and in such case, the Company will increase the Amount of Insurance to the amount
requested by the Insured, not to exceed the amount of the Insured Mortgage, and will amend the Date of
Policy to the date of the creation of such additional indebtedness and liability, provided that, as of the date of
the creation of such additional indebtedness and liability, the Insured:
i) conducts a subsearch of the public records (including searching executions) and confirms there are no
liens, encumbrances, or adverse interests registered against the title;
ii) does not have Knowledge of any liens, encumbrances or adverse interests;
iii) confirms realty taxes are not in arrears; and
iv) agrees to pay the Company the premium at the then applicable rates for the increase in the Amount of
Insurance.
5.
Limitation of Company’s liability
The Insured acknowledges and agrees that:
i)
in the event the total indebtedness and liability of the mortgagor exceeds the Amount of
Insurance and the Insured has not increased the Amount of Insurance as provided for herein,
the Company’s liability for loss or damage arising from matters covered under the policy will
be limited to losses not exceeding the amount by which the value of the Land at the time of
loss falls below the Amount of Insurance; and
This Endorsement is made a part of the policy and is subject to all the terms and provisions thereof and of any prior
endorsements thereto. Except to the extent expressly stated, this Endorsement neither modifies any of the terms and
provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and prior
endorsements, nor does it increase the face amount thereof. Signed under seal for the Company, but this Endorsement
is to be valid only when it bears an authorized countersignature, dated 7 March, 2016.
Countersigned:
Authorized Countersignature
Stewart Title Guaranty Company
Toronto, Ontario, Canada
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ENDORSEMENT TO TITLE POLICY
Attached to and forming part of Policy No. M-7762
Charge $Nil
05/06/2008 – Loan
ISSUED BY
STEWART TITLE
G U A R A N T Y
C O M P A N Y
HEREIN CALLED THE COMPANY
SUBSEQUENT LOAN FACILITIES ENDORSEMENT (SPECIAL)
- Page 3 ii) if the indebtedness and liability of the mortgagor is increased at any time subsequent to the
Date of Policy so that the total indebtedness and liability of the mortgagor exceeds the
Amount of Insurance and if the Date of Policy is not amended as provided for herein, the
Company is not liable for any loss or damage sustained or incurred by the Insured by reason
of any matters covered under this Policy arising or created subsequent to the Date of Policy.
Issuing Guidelines:
This endorsement is not applicable in construction situations. If any subsequent registrations become
apparent through a subsearch of title, or otherwise, these are to be reported to the Company prior to any
amendment to the Date of Policy or Amount of Insurance and the Company reserves the right to provide
further underwriting.
This Endorsement is made a part of the policy and is subject to all the terms and provisions thereof and of any prior
endorsements thereto. Except to the extent expressly stated, this Endorsement neither modifies any of the terms and
provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and prior
endorsements, nor does it increase the face amount thereof. Signed under seal for the Company, but this Endorsement
is to be valid only when it bears an authorized countersignature, dated 7 March, 2016.
Countersigned:
Authorized Countersignature
Stewart Title Guaranty Company
Toronto, Ontario, Canada
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Schedule C
Issued by:
CHICAGO TITLE INSURANCE COMPANY
Endorsement
Subsequent Loan Facilities (BDC 04/10)
1.
Insurance covers all indebtedness and liability and payments do not reduce the
Amount of Insurance
The Company acknowledges and agrees that the Insured Mortgage secures all present
and future indebtedness and liability of the mortgagor up to the amount of insurance as
amended from time to time as provided for hereunder (the "Amount of Insurance") and
that, notwithstanding the terms and conditions of the policy and any endorsement, the
Amount of Insurance shall not be reduced by payments made on any such indebtedness
and liability.
2.
Amend Date of Policy: Subsequent Advances
On the creation of future indebtedness and liability up to the Amount of Insurance, other
than pursuant to advances contemplated by the revolving credit facility endorsement the
Company will deem the Date of Policy to be the date of the creation of such future
indebtedness and liability provided that, as of the date of the creation of such future
indebtedness and liability, the insured:
(i) conducts a subsearch of the public records (including searching executions)
and confirms there are no liens, encumbrances or adverse interests registered
against the title;
(ii) does not have actual knowledge of any liens, encumbrances or adverse
interests; and
(iii) confirms realty taxes are not in arrears.
3.
Priority of subsequent advances: Date of Policy
The insured acknowledges and agrees that on the creation of future indebtedness and
liability, other than pursuant to advances contemplated by the revolving credit facility
endorsement, and if the Date of Policy is not deemed to be amended as provided for in
paragraph 2, the Company is not liable for any loss or damage sustained or incurred by
the insured by reason of any matters covered under the Policy arising or created
subsequent to the Date of Policy.
4.
Increasing Amount of Insurance
Additional indebtedness and liability may be created by the mortgagor to an amount
which exceeds the Amount of Insurance and in such case, the Company will increase the
Amount of Insurance to the amount requested by the insured, not to exceed the amount
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of the Insured Mortgage, and will amend the Date of Policy to the date of the creation of
such additional indebtedness and liability, provided that, as of the date of the creation of
such additional indebtedness and liability; the insured:
i) conducts a subsearch of the public records (including searching executions)
and confirms there are no liens, encumbrances or adverse interests registered
against the title;
ii) does not have actual knowledge of any liens, encumbrances or adverse
interests;
iii) confirms realty taxes are not in arrears; and
iv) agrees to pay the Company the premium at the then applicable rates for the
increase in the Amount
of Insurance.
5.
Limitation of Company's liability
The insured acknowledges and agrees that:
i) in the event the total indebtedness and liability of the mortgagor exceeds the
Amount of Insurance and the insured has not increased the Amount of Insurance
as provided for herein, the Company's liability for loss or damage arising from
matters covered under the policy will be limited to losses not exceeding the
amount by which the value of the land at the time of loss falls below the Amount
of Insurance; and
ii) if the Indebtedness and liability of the mortgagor is increased at any time
subsequent to the Date of
Policy so that the total indebtedness and liability of the mortgagor exceeds the
Amount of Insurance and if the Date of Policy is not amended as provided for
herein, the Company is not liable for any loss or damage sustained or incurred by
the insured by reason of any matters covered under the Policy arising or created
subsequent to the Date of Policy
This endorsement is issued as part of the policy. Except as it expressly states, it does not
(i) modify any of the terms and provisions of the policy, (ii) modify any prior
endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance.
To the extent a provision of the policy or a previous endorsement is inconsistent with an
express provision of this endorsement, this endorsement controls. Otherwise, this
endorsement is subject to all of the terms and provisions of the policy and of any prior
endorsements.
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Dated:
CHICAGO TITLE INSURANCE COMPANY
Authorized Signatory
Note: This endorsement shall not be valid or binding until countersigned by an authorized signatory.
Issuing Guidelines:
In order to issue the Subsequent Advance Endorsement the insured must comply with
the provisions stated in the endorsement.
As to paragraph 2, it is not necessary to advise us of each subsequent advance, but you
must maintain a record of your searches (including confirmation of taxes) and the date of
each advance.
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