Securities Regulatory Notice for Mortgage Investment

    To the global reader:

    Every country has rules of some kind. The content and principles discussed in this website are applicable to you, no matter where you live or choose to invest. In some examples and checklists, the security described is real estate, however you can apply the general principles to any other type of asset class. Seek counsel from your local business or legal advisor if you don't have experience in private lending. 


    To readers who are based in, or do business in Canada:

    PrivateLender.org
    Calgary, Alberta, Canada:
    April 2014


    A memo to the reader regarding securities regulation and its affect on mortgage investment. In Canada, if you are an individual and seek to invest some of your networth into an investment, you must be aware of what you are doing. Part of establishing awareness, is to educate yourself in the subject of investments or gain the counsel of a financial advisor, business advisor and/or legal advisor.
     
    This website is designed to educate the general public about mortgage and non-mortgage private lending solutions. Some individuals may wonder if PrivateLender.org is regulated under a federal or provincial Securities Act, because this public website discusses the concept of investing. The answer is no. PrivateLender.org's primary focus is accreditation and information sharing.
     
    If, however, upon becoming an Accredited Class® Private LenderTM, you seek to invest in specific mortgage transactions, then you have the option to work with an APLTM Authorized Mortgage Agent who can originate transactions for you. You may find a list of mortgage agents here.  All APLTM Authorized Mortgage Agents adhere to quality management principals based upon the ISO 9000 Quality Management Standards and all are licensed to trade in mortgages within their respective provinces. APLTM Authorized Mortgage Agents are not regulated by a Securities Act, since licensed mortgage brokers are exempt (see Table 1.1 below) from same. Moreover, APLTM Authorized Mortgage Agents work with Accredited Class® Private LendersTM who do not "syndicate" mortgage investment opportunities. That means, two or more persons or companies are not participating, directly or indirectly, as lenders in a debt obligation secured by a mortgage. Private mortgage investors are typically APLsTM  (individuals or corporations) who are the sole investor in a mortgage investment. 
     
    All APLTM Authorized Mortgage Agents are licensed to trade as Mortgage Brokers in their respective mortgages under their provincial legislation. For example, in the Province of Alberta and British Columbia under the Real Estate Act (Alberta) and Mortgage Brokers Act (British Columbia), respectively. Further, all APLTM Authorized Mortgage Agents are registered with their provincial regulators; for example: the Real Estate Council of Alberta (www.reca.ca) or the Financial Services Commission of BC (www.ficom.gov.bc.ca) or the Financial Services Commission of Ontario (www.fsco.gov.on.ca)
     
    Table 1.1 

    NI 31-103 (new rules)


    NI 31-103CP (new rules)

     
     
    In accordance with National Instrument NI 31-103 (Registration Requirements & Exemptions)
     
    Part 8 - Exemptions from the Requirement to Register
     
    Division 1 - Exemptions from Dealer and Underwriter Registration
     
    8.3  Interpretation – Exemption from Underwriter Registration Requirement
     
    In this Division, an exemption  from the dealer registration requirement is an exemption
    from the underwriter registration requirement.
     
     
    8.12  Mortgages
     
    (1)  In this section, “syndicated mortgage” means a mortgage in which two or more persons or companies participate, directly or indirectly, as lenders in the debt obligation that is secured by the mortgage.
     
    (2)  Subject to subsection (3), the dealer registration requirement does not apply in respect of a trade in a mortgage on real property in a jurisdiction of Canada by a person or company who is registered or licensed, or exempted from registration or licensing, under mortgage brokerage or  mortgage dealer legislation of that jurisdiction. 
     
    (3)  In Alberta, British Columbia, Manitoba, Québec and Saskatchewan, subsection (2) does not apply in respect of a trade in a syndicated mortgage.  
     
    (4)  This section does not apply in Ontario.
     
    Note:  In Ontario  a similar exemption from the dealer registration requirement is provided under subsection 35(4) of the Securities Act (Ontario).
     

    See: https://www.osc.gov.on.ca/en/6434.htm

    In accordance with Companion Policy to NI 31-103

    PART 8 - 
     
    NI 31-103 provides several exemptions from the registration requirement. There may be
    additional exemptions in securities legislation. If a firm is exempt from registration, the
    individuals acting on its behalf are also exempt from registration.
     
    Division 1  Exemptions from Dealer and Underwriter Registration
     
    We provide no specific guidance for the following exemptions because there is guidance
    on them in the Companion Policy to NI 45-106: (see table below).


          8.12 Mortgages 
          8.17 Reinvestment plan 
          8.20 Exchange contract  –  Alberta, British Columbia, New Brunswick and Saskatchewan

    NATIONAL INSTRUMENT 45-102
    RESALE OF SECURITIES

    NI 45-106 and NI 45-106CP (old rules)

    See: https://www.osc.gov.on.ca/en/6434.htm

    PART 2: Prospectus Exemptions

    Division 5: Miscellaneous Exemptions 

    2.36 Mortgages

    This provision is not cited in any Appendix of National Instrument 45-102 Resale of Securities. 
    These securities are free trading. 

    (1) In this section, “syndicated mortgage” means a mortgage in which 2 or more persons participate, directly or indirectly, as a lender in a debt obligation that is secured by the mortgage.
     
    (2) Except in Ontario, and subject to subsection (3), the prospectus requirement does not apply to a distribution of a mortgage on real property in a jurisdiction of Canada by a person who is registered or licensed, or exempted from registration or licensing, under mortgage brokerage or mortgage dealer legislation of that jurisdiction. 
     
    (3) In Alberta, British Columbia, Manitoba, Québec and Saskatchewan, subsection (2) does not apply to a distribution of a syndicated mortgage. 
     
    Personal property security legislation
    This provision is not cited in any Appendix of National Instrument 45-102 Resale of Securities. 
    These securities are free trading.

    In Ontario, paragraph 73(1)(a) of the Securities Act (Ontario) provides a similar exemption.

     

    PART 3: Registration Exemptions

    Division 5: Miscellaneous Exemptions

    3.36 Mortgages 
     
    (1) In this section, “syndicated mortgage” means a mortgage in which 2 or more persons participate, directly or indirectly, as a lender in a debt obligation that is secured by the mortgage.
     
    (2) Except in Ontario, and subject to subsection (3), the dealer registration requirement does not apply in respect of a trade in a mortgage on real property in a jurisdiction of Canada by a person who is registered or licensed, or exempted from registration or licensing, under mortgage  brokerage or mortgage dealer legislation of that jurisdiction. 
     
    (3) In Alberta, British Columbia, Manitoba, Québec and Saskatchewan, subsection (2) does not apply in respect of a trade in a syndicated mortgage.
     
    In Ontario, subsection 35(4) of the Securities Act (Ontario) provides a similar exemption.

     

     

     Search the web for details on the old rules