irrevocable assignment of mortgage proceeds

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Assignment of Proceeds: Meaning, Pros and Cons, Example

Diane Costagliola is a researcher, librarian, instructor, and writer who has published articles on personal finance, home buying, and foreclosure.

irrevocable assignment of mortgage proceeds

Investopedia / Jiaqi Zhou

What Is an Assignment of Proceeds?

An assignment of proceeds occurs when a beneficiary transfers all or part of the proceeds from a letter of credit to a third-party beneficiary . Assigning the proceeds from a letter of credit can be utilized in many types of scenarios, such as to pay suppliers or vendors in a business transaction or to settle other debts.

Key Takeaways

An assignment of proceeds can be used to redirect funds from a line of credit to a third party.
An assignment of proceeds must be approved by the financial institution that granted the line of credit following a request and fulfillment of any obligations by the original beneficiary.
A benefit of this type of transaction is the ability to redirect only a portion of the proceeds, in which case both the original beneficiary and third party can access the same letter of credit.
A drawback of this type of transaction is that the original beneficiary is still responsible for fulfilling all requirements under the letter of credit, even when the funds are redirected to the third party.
This type of transaction is used in a number of circumstances, such as when paying suppliers or vendors, or when settling outstanding debts.

Understanding an Assignment of Proceeds

A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. The original beneficiary, the named party who is entitled to receive the proceeds from a letter of credit, may choose to have them delivered to a third party instead, through an "assignment of proceeds."

Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.

In order to process an assignment of proceeds, the original beneficiary of the letter of credit must submit a request to the bank or other financial institution issuing the letter of credit requesting to assign the funds to a different individual or company. The assignment of proceeds will need to be approved by the financial institution once it is submitted, pending the fulfillment of any requirements set forth in the letter of credit.

If the original beneficiary does not meet the obligations outlined in the letter of credit, no assignment will take place. Once approved, the bank or other entity will release the money to the specified third party to be drawn upon at will.

Advantages and Disadvantages of an Assignment of Proceeds

The main benefit of an assignment of proceeds is that the original beneficiary has the ability to assign all or just a portion of the letter of credit to the third party. The original beneficiary will retain access to any portion of the proceeds not redirected to the third party. This allows both entities to make use of the same letter of credit when necessary.

This benefit must be weighed against the potential drawback of this type of transaction. When an assignment of proceeds takes place, the financial institution is not contracting directly with the third-party beneficiary. It is only acting as an agent in supplying the funds to the third party. The original beneficiary is still responsible for completing any and all requirements under the letter of credit.

Example of an Assignment of Proceeds

Assume XYZ Customer, in Brazil, is purchasing widgets from ABC Manufacturer, in the United States. In order to sign off on the deal, ABC Manufacturer requires that XYZ Customer obtains a letter of credit from a bank to mitigate the risk that XYZ may not pay ABC for the widgets once ABC has shipped them out of the country.

At this point, ABC Manufacturer is able to request that a portion of these funds be redirected to DEF Supplier, whom ABC still owes money for parts used in making the widgets. Even though a portion of the funds has been redirected to DEF Supplier, ABC Manufacturer still has to fulfill its obligations under the letter of credit, such as shipping out the widgets to XYZ.

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Understanding the Assignment of Mortgages: What You Need To Know

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A mortgage is a legally binding agreement between a home buyer and a lender that dictates a borrower's ability to pay off a loan. Every mortgage has an interest rate, a term length, and specific fees attached to it.

Written by Attorney Todd Carney . Updated November 26, 2021

If you’re like most people who want to purchase a home, you’ll start by going to a bank or other lender to get a mortgage loan. Though you can choose your lender, after the mortgage loan is processed, your mortgage may be transferred to a different mortgage servicer . A transfer is also called an assignment of the mortgage.

No matter what it’s called, this change of hands may also change who you’re supposed to make your house payments to and how the foreclosure process works if you default on your loan. That’s why if you’re a homeowner, it’s important to know how this process works. This article will provide an in-depth look at what an assignment of a mortgage entails and what impact it can have on homeownership.

Assignment of Mortgage – The Basics

When your original lender transfers your mortgage account and their interests in it to a new lender, that’s called an assignment of mortgage. To do this, your lender must use an assignment of mortgage document. This document ensures the loan is legally transferred to the new owner. It’s common for mortgage lenders to sell the mortgages to other lenders. Most lenders assign the mortgages they originate to other lenders or mortgage buyers.

Home Loan Documents

When you get a loan for a home or real estate, there will usually be two mortgage documents. The first is a mortgage or, less commonly, a deed of trust . The other is a promissory note. The mortgage or deed of trust will state that the mortgaged property provides the security interest for the loan. This basically means that your home is serving as collateral for the loan. It also gives the loan servicer the right to foreclose if you don’t make your monthly payments. The promissory note provides proof of the debt and your promise to pay it.

When a lender assigns your mortgage, your interests as the mortgagor are given to another mortgagee or servicer. Mortgages and deeds of trust are usually recorded in the county recorder’s office. This office also keeps a record of any transfers. When a mortgage is transferred so is the promissory note. The note will be endorsed or signed over to the loan’s new owner. In some situations, a note will be endorsed in blank, which turns it into a bearer instrument. This means whoever holds the note is the presumed owner.

Using MERS To Track Transfers

Banks have collectively established the Mortgage Electronic Registration System , Inc. (MERS), which keeps track of who owns which loans. With MERS, lenders are no longer required to do a separate assignment every time a loan is transferred. That’s because MERS keeps track of the transfers. It’s crucial for MERS to maintain a record of assignments and endorsements because these land records can tell who actually owns the debt and has a legal right to start the foreclosure process.

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Assignment of Mortgage Requirements and Effects

The assignment of mortgage needs to include the following:

The original information regarding the mortgage. Alternatively, it can include the county recorder office’s identification numbers.

The borrower’s name.

The mortgage loan’s original amount.

The date of the mortgage and when it was recorded.

Usually, there will also need to be a legal description of the real property the mortgage secures, but this is determined by state law and differs by state.

Notice Requirements

The original lender doesn’t need to provide notice to or get permission from the homeowner prior to assigning the mortgage. But the new lender (sometimes called the assignee) has to send the homeowner some form of notice of the loan assignment. The document will typically provide a disclaimer about who the new lender is, the lender’s contact information, and information about how to make your mortgage payment. You should make sure you have this information so you can avoid foreclosure.

Mortgage Terms

When an assignment occurs your loan is transferred, but the initial terms of your mortgage will stay the same. This means you’ll have the same interest rate, overall loan amount, monthly payment, and payment due date. If there are changes or adjustments to the escrow account, the new lender must do them under the terms of the original escrow agreement. The new lender can make some changes if you request them and the lender approves. For example, you may request your new lender to provide more payment methods.

Taxes and Insurance

If you have an escrow account and your mortgage is transferred, you may be worried about making sure your property taxes and homeowners insurance get paid. Though you can always verify the information, the original loan servicer is responsible for giving your local tax authority the new loan servicer’s address for tax billing purposes. The original lender is required to do this after the assignment is recorded. The servicer will also reach out to your property insurance company for this reason.

If you’ve received notice that your mortgage loan has been assigned, it’s a good idea to reach out to your loan servicer and verify this information. Verifying that all your mortgage information is correct, that you know who to contact if you have questions about your mortgage, and that you know how to make payments to the new servicer will help you avoid being scammed or making payments incorrectly.

Let's Summarize…

In a mortgage assignment, your original lender or servicer transfers your mortgage account to another loan servicer. When this occurs, the original mortgagee or lender’s interests go to the next lender. Even if your mortgage gets transferred or assigned, your mortgage’s terms should remain the same. Your interest rate, loan amount, monthly payment, and payment schedule shouldn’t change.

Your original lender isn’t required to notify you or get your permission prior to assigning your mortgage. But you should receive correspondence from the new lender after the assignment. It’s important to verify any change in assignment with your original loan servicer before you make your next mortgage payment, so you don’t fall victim to a scam.

Attorney Todd Carney

Attorney Todd Carney is a writer and graduate of Harvard Law School. While in law school, Todd worked in a clinic that helped pro-bono clients file for bankruptcy. Todd also studied several aspects of how the law impacts consumers. Todd has written over 40 articles for sites such... read more about Attorney Todd Carney

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When Assigning the Right to Pursue Relief, Always Remember to Assign Title to, Or Ownership in, The Claim

Posted on: Oct 4 2016

Whether a party has standing to bring a lawsuit is often considered through the constitutional lens of justiciability – that is, whether there is a “case or controversy” between the plaintiff and the defendant “within the meaning of Art. III.” Warth v. Seldin, 422 U.S. 490, 498 (1975). To have Article III standing, “the plaintiff [must have] ‘alleged such a personal stake in the outcome of the controversy’ as to warrant [its] invocation of federal-court jurisdiction and to justify exercise of the court’s remedial powers on [its] behalf.” Id. at 498–99 (quoting Baker v. Carr , 369 U.S. 186, 204 (1962)).

To show a personal stake in the litigation, the plaintiff must establish three things: First, he/she has sustained an “injury in fact” that is both “concrete and particularized” and “actual or imminent.” Lujan v. Defenders of Wildlife , 504 U.S. 555, 560 (1992) (internal quotation marks omitted). Second, the injury has to be caused in some way by the defendant’s action or omission. Id . Finally, a favorable resolution of the case is “likely” to redress the injury. Id . at 561.

When a person or entity receives an assignment of claims, the question becomes whether he/she can show a personal stake in the outcome of the litigation, i.e. , a case and controversy “of the sort traditionally amenable to, and resolved by, the judicial process.’” Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 285 (2008) (quoting Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 777–78 (2000)).

To assign a claim effectively, the claim’s owner “must manifest an intention to make the assignee the owner of the claim.” Advanced Magnetics, Inc. v. Bayfront Partners, Inc. , 106 F.3d 11, 17 (2d Cir. 1997) (internal quotation marks and brackets omitted). A would-be assignor need not use any particular language to validly assign its claim “so long as the language manifests [the assignor’s] intention to transfer at least title or ownership , i.e., to accomplish ‘a completed transfer of the entire interest of the assignor in the particular subject of assignment.’” Id. (emphasis added) (citations omitted). An assignor’s grant of, for example, “‘the power to commence and prosecute to final consummation or compromise any suits, actions or proceedings,’” id. at 18 (quoting agreements that were the subject of that appeal), may validly create a power of attorney, but that language would not validly assign a claim, because it does “not purport to transfer title or ownership” of one. Id.

On September 15, 2016, the New York Appellate Division, First Department, issued a decision addressing the foregoing principles holding that one of the plaintiffs lacked standing to assert claims because the assignment of the right to pursue remedies did not constitute the assignment of claims. Cortlandt St. Recovery Corp. v. Hellas Telecom., S.à.r.l. , 2016 NY Slip Op. 06051.

BACKGROUND :

Cortlandt involved four related actions in which the plaintiffs – Cortlandt Street Recovery Corp. (“Cortlandt”), an assignee for collection, and Wilmington Trust Co. (“WTC”), an indenture trustee – sought payment of the principal and interest on notes issued in public offerings. Each action alleged that Hellas Telecommunications, S.a.r.l. and its affiliated entities, the issuer and guarantor of the notes, transferred the proceeds of the notes by means of fraudulent conveyances to two private equity firms, Apax Partners, LLP/TPG Capital, L.P. – the other defendants named in the actions.

The defendants moved to dismiss the actions on numerous grounds, including that Cortlandt, as the assignee for collection, lacked standing to pursue the actions. To cure the claimed standing defect, Cortlandt and WTC moved to amend the complaints to add SPQR Capital (Cayman) Ltd. (“SPQR”), the assignor of note interests to Cortlandt, as a plaintiff. The plaintiffs alleged that, inter alia , SPQR entered into an addendum to the assignment with Cortlandt pursuant to which Cortlandt received “all right, title, and interest” in the notes.

The Motion Court granted the motions to dismiss, holding that, among other things, Cortlandt lacked standing to maintain the actions and that, although the standing defect was not jurisdictional and could be cured, the plaintiffs failed to cure the defect in the proposed amended complaint. Cortlandt St. Recovery Corp. v. Hellas Telecom., S.à.r.l. , 47 Misc. 3d 544 (Sup. Ct., N.Y. Cnty. 2014).

The Motion Court’s Ruling

As an initial matter, the Motion Court cited to the reasoning of the court in Cortlandt Street Recovery Corp. v. Deutsche Bank AG, London Branch , No. 12 Civ. 9351 (JPO), 2013 WL 3762882, 2013 US Dist. LEXIS 100741 (S.D.N.Y. July 18, 2013) (the “SDNY Action”), a related action that was dismissed on standing grounds. The complaint in the SDNY Action, like the complaints before the Motion Court, alleged that Cortlandt was the assignee of the notes with a “right to collect” the principal and interest due on the notes. As evidence of these rights, Cortlandt produced an assignment, similar to the ones in the New York Supreme Court actions, which provided that as the assignee with the right to collect, Cortlandt could collect the principal and interest due on the notes and pursue all remedies with respect thereto. In dismissing the SDNY Action, Judge Oetken found that the complaint did not allege, and the assignment did not provide, that “title to or ownership of the claims has been assigned to Cortlandt.” 2013 WL 3762882, at *2, 2013 US Dist. LEXIS 100741, at *7. The court also found that the grant of a power of attorney (that is, the power to sue on and collect on a claim) was “not the equivalent of an assignment of ownership” of a claim. 2013 WL 3762882 at *1, 2013 US Dist. LEXIS 100741 at *5. Consequently, because the assignment did not transfer title or ownership of the claim to Cortlandt, there was no case or controversy for the court to decide ( i.e. , Cortlandt could not prove that it had an interest in the outcome of the litigation).

The Motion Court “concur[red] with” Judge Oeken’s decision, holding that “the assignments to Cortlandt … were assignments of a right of collection, not of title to the claims, and are accordingly insufficient as a matter of law to confer standing upon Cortlandt.” In so holding, the Motion Court observed that although New York does not have an analogue to Article III, it is nevertheless analogous in its requirement that a plaintiff have a stake in the outcome of the litigation:

New York does not have an analogue to article III. However, the New York standards for standing are analogous, as New York requires “[t]he existence of an injury in fact—an actual legal stake in the matter being adjudicated.”

Under long-standing New York law, an assignee is the “real party in interest” where the “title to the specific claim” is passed to the assignee, even if the assignee may ultimately be liable to another for the amounts collected.

Citations omitted.

Based upon the foregoing, the Motion Court found that Cortlandt lacked standing to pursue the actions.

Cortlandt appealed the dismissal. With regard to the Motion Court’s dismissal of Cortlandt on standing grounds, the First Department affirmed the Motion Court’s ruling, holding:

The [IAS] court correctly found that plaintiff Cortlandt Street Recovery Corp. lacks standing to bring the claims in Index Nos. 651693/10 and 653357/11 because, while the assignments to Cortlandt for the PIK notes granted it “full rights to collect amounts of principal and interest due on the Notes, and to pursue all remedies,” they did not transfer “title or ownership” of the claims.

The Takeaway

Cortlandt limits the ability of an assignee to pursue a lawsuit when the assignee has no direct interest in the outcome of the litigation. By requiring an assignee to have legal title to, or an ownership interest in, the claim, the Court made clear that only a valid assignment of a claim will suffice to fulfill the injury-in-fact requirement. Cortlandt also makes clear that a power of attorney permitting another to conduct litigation on behalf of others as their attorney-in-fact is not a valid assignment and does not confer a legal title to the claims it brings. Therefore, as the title of this article warns: when assigning the right to pursue relief, always remember to assign title to, or ownership in, the claim.

Tagged with: Business Law

Residential Real Estate Sales - The Process

General information for seller(s) of residential property.

The following is for general information and is designed to outline the typical steps that will be taken in connection with the sale of your property, and to clarify the role of seller's solicitor. Each transaction is unique, and the following is intended only to provide general information on the usual process involved in selling a residential property in Alberta.

The following discussion assumes that you have engaged a licensed Realtor to act on your behalf. If you are selling your property without the assistance of a Realtor, we can provide assistance in drafting a Contract and with other services typically provided by the Realtor.

The Contract

The document which controls many of the steps involved in the purchase and sale of the property is the Real Estate Purchase Contract (there are “standard” Alberta Real Estate Association forms typically used) which you have signed. While many of the terms are standard, each transaction will have specific conditions written in. If you have not yet signed a Contract, and you wish to have it reviewed, we can assist with that. Once the Contract is signed by both parties, very little can be done to change any terms agreed to. Also, municipality in which the property is located, the nature of the property and many other factors will affect the details of how the transaction proceeds. Particulars of your transaction will result in some variation of the general process described below. It is the Contract that establishes the terms and conditions upon which the transaction is to be completed. In the event that the Contract does not deal with a particular concern which you might have, or if any revisions to the Contact are required, please advise us immediately.

In addition to the terms of the Real Estate Purchase Contract, Alberta real estate practice involves the use of "trust conditions" between the solicitors acting on behalf of the seller(s) and the purchaser(s). Essentially, these are "rules" imposed by one solicitor and accepted by the other to facilitate the completion of the transfer of ownership of the property. There is additional information on trust conditions below.

What You Need To Do

We recommend that prior to accepting an offer and executing the Contract to sell your property, you first obtain a Real Property Report and apply for and obtain a Certificate of Compliance from the appropriate municipality. This is not needed for condominiums, unless the condominium property you own is a "bare land" condominium. Your realtor should be able to assist with this, or you can contact any licensed Alberta Land Surveyor for pricing. The reason we prefer that you obtain this prior entering the Contract is that if there are any issues that are disclosed, they can be dealt with before you have entered to the Contract with the purchaser(s). If you have an existing Real Property Report (perhaps from when you purchased the property), you may be able to use that, as long as there have been no changes to any structures since the date of the existing Report. There is more information on Real Property Reports below.

Once you have accepted and signed an offer to purchase your property (i.e. the Contract), advise your realtor that we will be acting for you to complete the transaction. When conditions are met or waived, the realtor will forward us the information we require to complete the transaction. Also, you will need to ensure you have the following:

The up to date Real Property Report with municipality compliance stamp or letter. See discussion below. Failure to have this available may delay or even jeopardize your sale. (This is usually not required for condominium property unless it is a “bare land” condominium)

Loan or mortgage account number(s) for any registered mortgages or credit facilities to be paid out of sale proceeds

Transfer Of Title

Once retained, we prepare the documentation required to transfer title to the subject property from you to the purchaser(s). You should be prepared to meet with me or my assistant approximately eight to ten days prior to the possession date for the purpose of signing the transfer documents. When documents are ready, I will contact you to arrange for a mutually acceptable time when we can meet to sign the documents. Original documents are required as the Land Titles Office will not accept copies or scanned signatures.

Please advise us immediately if you are not now a resident of Canada, or if you will cease to be a resident of Canada within 60 days after possession date, as sales by “non-residents” raise additional concerns which must be promptly addressed.

Trust Conditions

Real estate conveyancing in Alberta is done pursuant to trust conditions agreed upon between the solicitors representing the seller and purchaser, respectively. Trust conditions are used in order to facilitate the transfer of title and the advance of funds with a minimal amount of inconvenience, while providing the required degree of security for both parties. It is important to realize that the use of trust conditions may represent a modification of the mechanism for transferring title and discharging non-assumed encumbrances set out in the Contract. If you have any questions or concerns in this regard they should immediately be brought to our attention.

When the Contract contemplates the purchaser obtaining mortgage financing to assist with the purchase of the property, the usual method for dealing with this situation in Alberta is to permit early registration of the transfer, provided that:

the difference between the cash to close and the net mortgage proceeds has been forwarded to the seller’s solicitors;

a "transfer back" in favour of the seller has been signed and is held in trust by the solicitors for the purchaser;

an irrevocable assignment of the net mortgage proceeds to the seller’s lawyer has been signed; and

if possession is to be given prior to the payment of all funds, a tenancy at will agreement has been executed.

In some cases closing is done using title insurance. If this applies to your transaction, we can discuss this further at the time.

Discharge Of Mortgage Financing

If there is presently a mortgage, registered secured line of credit or other encumbrances registered against your property that will not be assumed by the purchaser, we will be attending to the pay-out and discharge of this mortgage or other encumbrance. We will be corresponding directly with the mortgage company for the purpose of obtaining a discharge statement and to determine what penalties, if any, may be payable by you. If you have a statement or other document showing the mortgage company loan number please forward it to us to assist in getting the payout statement.

Assumption Of Mortgage Financing

If there is presently a mortgage registered on the Certificate of Title to your property that is to be assumed by the purchaser, we will be corresponding directly with the mortgage company for the purpose of obtaining an assumption statement and to determine whether the mortgage can be assumed. The assumption figure provided to us will form a part of the purchase price to be paid and if the exact assumption figure is different from the figure set out on the Real Estate Purchase Contract, an adjustment to the cash portion of the purchase price will be made. If you have not yet accepted an offer to sell your property, prior to doing so, please contact us to discuss the issues that arise when allowing an assumption of your mortgage by a purchaser.

Real Property Report (Non Condominium Sale)

Pursuant to the terms of the standard form real estate purchase contract used by the Alberta Real Estate Association, a seller is required to provide the purchaser with a current "Real Property Report", which is essentially a survey of the property showing the lot, and locations of all improvements, such as buildings, fences, etc. In addition, the Real Property Report must have endorsed thereon evidence from the municipal authority confirming that the location of the buildings and fixtures on the lot complies with local bylaws and that there are no encroachments on utility rights of way or adjoining properties. FAILURE TO PROVIDE THIS IN ADVANCE OF YOUR COMPLETION (POSSESSION) DAY COULD DELAY OR EVEN THREATEN CLOSING.

If you have an existing Real Property Report, provided that there have been no additions or renovations to the exterior of the property since the preparation of the Real Property Report (including fences, garages, etc.), then you will likely be able to use the existing Real Property Report to satisfy this term in the Contract. Otherwise, the present cost of obtaining a new Real Property Report approximates $750, plus the municipality fee for application of confirmation of compliance with municipal bylaws. We will need you to provide us with a current Real Property Report at least two weeks prior to the date when your sale is scheduled to close. The foregoing comments are not applicable to condominiums (except “bare land” condominiums).

Estoppel Certificate and Certificate of Insurance (Condominium Sale Only)

If you are selling condominium property, you are responsible for obtaining from the condominium corporation and providing to me an Estoppel Certificate and Certificate of Insurance. Your condominium corporation will normally charge a fee for this service. We normally order and pay for that and recover the cost from the sale proceeds.

Automatic Mortgage And Tax Payment Plans

You should ensure that any automatic mortgage or tax payment plan is terminated after payment of the last payment for which you are responsible. We will adjust the sale price for any payments made that cover any period after the Completion (possession) Day. Please keep in mind that mortgage payments are always in arrears, for example a payment made on June 1 would be in respect of the month of May.

We recommend that you maintain insurance coverage on your property until you have received all the monies due with respect to the sale. We also strongly recommend that you advise your insurance agent of the possibility that the purchaser may be granted possession of your home on a tenancy-at-will basis pending receipt of all of the purchase price payable to you.

Utility Accounts

Utility accounts are not adjusted between the seller and the purchaser. We recommend that you, as seller, contact the utilities companies, close the utility accounts and arrange to have the utility meters read as near as possible to the date of possession.

Adjustment Of Purchase Price

The purchase price for your property is subject to adjustment. Adjustments will include realty taxes and any assumed mortgage. For condominium property, there may also be an adjustment for condominium fees. Certain communities also charge homeowner/amenities fees which are also adjusted for, if applicable. In any event, we will review the Statement of Adjustments with you in detail when you attend and meet to execute documents.

The practical aspects of obtaining keys and taking possession are normally handled through the Realtors involved with the transaction. If such is not the case, please advise, as keys and automatic garage door openers should not be made available to the purchaser until we have first confirmed that the sale has progressed to the stage where keys may be released.

Realtor's Commission

Any listing or other agreement you have entered into with your realtor will usually provide that the realtor will hold all deposits paid by the purchaser. The realtor will apply the deposit money directly to the commissions and other charges (usually GST) due on closing. Any amounts held in excess of the commissions due will be forwarded by your realtor to my office and disbursed with the balance of sale proceeds. Your listing agreement will also direct that if the deposit is less that the total balance due to your realtor, any shortfall owing will be paid directly from my office to the realtor from sale proceeds.

In the event and to the extent that sale proceeds are insufficient to retire the full amount of the balance owing to the realtor, this will be your direct responsibility. In the event that you do not agree with the information provided by the realtor with respect to the real estate commission payable on this sale, please advise me immediately.

Basic Fees And Disbursements for Residential Property Sale

The base fee in connection with a typical sale is $750. This is a fee and includes all work typically done to complete a “standard” sale with a payout of a single mortgage or registered line of credit. If you transaction requires work in addition to this basic service, additional fees will be applied, based on an hourly fee basis. If you are selling your property without the use of a Realtor, there will be additional legal costs as more time will be required for us to complete the transaction. You should also be aware that you will be responsible for disbursements (out of pocket expenses) in addition to my fees. Some of the more significant disbursements that you can anticipate are estimated as follows (these are approximations only):

(a) Real Property Report, if applicable, approximate $ 750.00

(b) Certificate of Compliance on Real Property Report) $ check with municipality

(d) Encumbrance and Title Searches (in some cases) $ 30.00

(e) Delivery and miscellaneous charges -- depending on many factors, typically ranges from $30 to $60

(f) Estoppel and Insurance Certificate (condominiums) -- as billed by Condominium Corporation.

(g) Additional Payout(s) (e.g. second mortgage, credit accounts) $50.00 per payout

GST will be added to our fees and to most disbursements.

Fees, disbursements and taxes are deducted from the sale proceeds.

Any quotation of fees is for standard services as outlined above and is based on the assumption that the transaction will not include unusual matters. If unusual matters arise that are likely to increase the costs, I will advise you as soon as is reasonably possible.

A full report and accounting is provided after closing.

The foregoing is intended as a general overview of the transaction the role of seller's solicitor. Each transaction is different and we will contact you further in connection with the particular aspects of your sale. We trust that you find the above to be informative and in the event that you wish to discuss any matters further, please contact us.

The content of this site is for informational purposes only, and is not intended to be taken as, or used as, legal advice.

Assignments: why you need to serve a notice of assignment

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork - not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice of assignment.

What issues are there with serving notice of assignment?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment.

The case concerned the assignment of a trade mark licence to GNIC . The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist.

At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC , as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Best practice for serving notice of assignment

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

For further advice on serving notice of assignment please contact Kirsty Barnes or Catherine Phillips from our Banking & Finance team.

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Is a Direction to Pay and Irrevocable Assignment of Proceeds a single transaction?

British Columbia, Canada

The following excerpt is from Fontaine v. Canada (Attorney General), 2008 BCCA 329 (CanLII):

The characterization of a Direction to Pay and Irrevocable Assignment of Proceeds as two parts of a single transaction is a finding of mixed fact and law. To interfere with it we must be satisfied there is a palpable and overriding error: Housen v. Nikolaisen , [2002] 2 S.C.R. 235, 2002 SCC 33.

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