Changes in Effect to the Cost of Collateral Mortgage Registration

February 06, 2025

Written By Michael Ramsay, Denise Bright, Alixe Cameron and Pamela Clark

To ensure that future borrowers and lenders alike are aware of a potentially significant change in Mortgage registration fee calculations at the Alberta Land Titles Office, and to help prevent any registration fee surprises on future debt financing deals, we confirm that as of January 31, 2025, Section 9 of the Financial Statutes Amendment Act (FSAA)¹ was proclaimed into force, and Section 102.1(3) of the Alberta Land Titles Act (LTA)² is repealed.

We recently highlighted this forthcoming change in our previous blog—The Alberta Government Proposes to Change the Cost of Registering a Mortgage. Now that the FSAA has been brought into force, this legislation will increase the registration fees for mortgages, debentures, trust deeds and certain other charges (collectively Mortgages) to be registered against any title to real property in Alberta (the Land) where the principal amount of the Mortgage, for various reasons, exceeds the value of the Land against which it is to be registered.

Implications of the Repeal of Section 102.1(3)

As mentioned in our previous blog, when a Mortgage over Land is part of the security given by the borrower to support the lender providing the credit facility, the principal amount on the face of the Mortgage is often equal to or in excess of the credit facility limit, regardless of the then current value of the Land it is registered against.  This ensures that if the value of the Land increases during the term of the credit facility, the lender’s security includes such increase in value, up to the face value of the mortgage.

Prior to January 31, 2025, Section 102.1(3) of the LTA provided that the registration costs of a Mortgage were to be based on the value of the Land if it was less than the principal amount the mortgage secures.

Now that this Section is repealed, the prescribed fees for a Mortgage will be solely based on its face value. While this does not affect Mortgages to be registered against Lands when the Mortgage is equal to or less than the value of the Lands, it does affect credit facilities under which this Mortgage and the Land is only one collateral component.

Our previous example provided now shows how prescribed fees are to be calculated:

Company A has a credit facility for $100 million for its business, which includes stores in multiple provinces. One of the stores is located in Alberta on Land owned by Company A, which Land has a value of $5 million. Company A's lender requires the registration of a Mortgage with a face value equal to the total value of the credit facility. Previously Company A would have included a statutory declaration as per Section 102.1(3) of the LTA confirming the reduction of the prescribed fees to be based on the $5 million value of the land, rather than the face value of the $100 million Mortgage concurrently with its submission for registration. The total prescribed fees would have been $5,050.

Now, despite the lands only being worth $5 million, the prescribed fees for the same Mortgage will now total $100,050. A 20x increase in fees.

Conclusion

Although the amendments to the Land Titles Act is specific to Alberta Lands, numerous collateral Mortgages are registered in line with the security requirements of national or global credit facilities. Therefore, it is essential for lenders, borrowers, and lawyers in other jurisdictions to be informed about this change. This awareness will ensure that any credit facilities under negotiation consider the financial implications of an Alberta Mortgage being registered at the face value of the credit facility.

Our national Commercial Real Estate group and Financial Services group are here to answer any inquiries you may have in relation to amendment to the LTA and its ramifications to the registration of Mortgages in Alberta. Please do not hesitate to contact the authors if you have further questions regarding the information above.

Authors