Bill C-421
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1st Session, 36th Parliament, 46-47 Elizabeth II, 1997-98
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The House of Commons of Canada
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BILL C-421 |
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An Act to amend the Interest Act (interest
payable on repayment of a mortgage loan
before maturity)
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| R.S., c. I-15;
1992, c. 1;
1993, c. 28;
1996, c. 17
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1. The Interest Act is amended by adding
the following after section 9:
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| When no
further
interest
payable
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9.1 (1) Whenever any principal money or
interest secured by mortgage on real property
is not, under the terms of the mortgage,
payable by a natural person before a time at
least one year and no more than five years after
the date of the mortgage, then, if at any time
before the expiration of this period, any
natural person liable to pay or entitled to
redeem the mortgage tenders or pays, to the
person entitled to receive the money, the
amount due for principal money and interest
to the time of payment, as calculated under
sections 6 to 9, together with the prescribed
interest in lieu of notice, no further interest
shall be chargeable, payable or recoverable at
any time thereafter on the principal money or
interest due under the mortgage.
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| Exception
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(2) Nothing in this section applies to any
mortgage on real property given by a joint
stock company or other corporation, nor to
any debenture issued by any such company or
corporation, for the payment of which security
has been given by way of mortgage on real
property.
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| Regulations
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(3) The Governor in Council may make
regulations fixing the rate of interest payable
under subsection (1) and the method of
calculating it.
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2. The Act is amended by adding the
following after section 10:
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| When no
further
interest
payable
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10.1 (1) Where a financial institution makes
a loan to a natural person of five hundred
thousand dollars or less, secured by a
mortgage on property and required to be
repaid either on a fixed future date or by
instalments, the financial institution shall
disclose to the borrower, in accordance with
the regulations, whether the borrower has the
right to repay the amount borrowed before the
maturity of the loan and, if so
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| Regulations
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(2) Subject to subsection (3), the Governor
in Council may make regulations respecting
such other matters or things as are necessary
to carry out the purposes of subsection (1).
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| Information to
be included
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(3) Regulations made under subsection (2)
shall provide that the information to be
communicated by the financial institution
shall be included in the mortgage document
and expressed in plain language in terms
generally understood by the public.
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| Definition of
``financial
institution''
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(4) For the purposes of this section,
``financial institution'' means a bank to which
the Bank Act applies, a company to which the
Trust and Loan Companies Act applies and a
foreign company to which the Insurance
Companies Act applies.
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| Offence and
punishment
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10.2 (1) Every person who, without
reasonable cause, contravenes any provision
of section 10.1 or a regulation made under this
section is guilty of an offence punishable on
summary conviction and liable on summary
conviction
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| Liability of
officers and
directors
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(2) Where a corporation commits an
offence under subsection (1), any officer or
director of the corporation who is in a position
to direct or influence the policies of the
corporation in respect of conduct prohibited
by this section is a party to and guilty of the
offence and liable to the punishment provided
for the offence, whether or not the corporation
has been prosecuted or convicted, unless the
officer or director establishes that the officer
or director exercised due diligence to prevent
the commission of the offence.
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| Order to
comply
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(3) Where a person has been convicted of an
offence under subsection (1), the court may, in
addition to any punishment it may otherwise
impose, order the person to comply with the
provisions in respect of which the person was
convicted.
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| Effect of
offence on
contracts
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(4) A contravention of section 10.1 or the
regulations made thereunder does not
invalidate any contract entered into in
contravention of the provision.
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