Sec. 181. Revesting of estate on payment of mortgage, p. 299.

Sec. 182. Obligation of mortgagee to reconvey, p. 301.

Sec. 183. Statutory form of discharge, p. 303.

Sec. 184. Effect of discharge when registered, p. 308.

Sec. 185. Discharge in case of death of mortgagee, p. 314.

Sec. 186. Vesting order, p. 317.

Sec. 187. Discharge under the Land Titles Acts, p. 321.

Sec. 181. Revesting of estate on payment of mortgage

It is customary in Ontario to insert in a mortgage the short form of defeasance clause contained in the Short Forms of Mortgages Act (a), as follows:

Provided this mortgage to be void on payment of.............. of lawful money of Canada, with interest at........ per cent., as follows: .......................................:............ and taxes and performance of statute labour.

If the mortgage is expressed to be made in pursuance of the statute a proviso in the foregoing form has the same effect as if it were in the following terms (b): ,

Provided always, and these presents are upon this express condition, that if the said mortgagor, his heirs, executors, administrators or assigns, or any of them, do and shall well and truly pay or cause to be paid unto the said mortgagee, his executors, administrators or assigns, the just and full sum of.................... of lawful money of Canada, with interest thereon, at the rate of ........per cent. per annum, on the days and times, and in manner following, that is to say........................................ without any deduction, defalcation or abatement out of the same for or in respect of any taxes, rates, levies, charges, rents, assessments, statute labour, or other impositions whatsoever already rated, charged, assessed or imposed or hereafter to be rated charged, assessed or imposed by authority of Parliament or of the Legislature, or otherwise howsoever, on the said lands and tenements, hereditaments and premises with the appurtenances, or on the said mortgagee, his heirs, executors, administrators or assigns, in respect of the said premises, or of the said money or interest, or any other matter or thing relating to these presents, and until such default as aforesaid shall and will well and truly pay, do and perform or cause or procure to be paid, done and performed, all matters and things in this proviso hereinbefore set forth, then these presents and everything in the same contained shall be absolutely null and void.

(a) R.S.O. 1914, c. 117, schedule B, clause 2.

(b) See chapter 35, Short Forms of Mortgages Act, Sec. 381.

Where a mortgage contains a defeasance clause or proviso that it shall become void on payment of the mortgage money, then, if payment is made strictly in accordance with the proviso (c), the estate will without reconveyance or release become revested in the mortgagor, or become vested in such other person as is entitled to it by assignment or subsequent mortgage from the mortgagor, as the case may be.

If, however, the condition of the mortgage is broken by default in payment or otherwise, payment thereafter will not divest the mortgagee of his title, and a reconveyance or release of the estate will be necessary. The fact that notwithstanding the default the mortgagor may have an equitable right to redeem (d) does not affect the legal estate in the land. The legal estate, having been conveyed to the mortgagee, remains in him if the event upon which it was to revest does not happen (e). The mortgagor who has paid, but not strictly in accordance with the terms of the mortgage, must, in order to compel the mortgagee to reconvey, resort to the equitable jurisdiction of the court (f).

(c) The mortgagee is not obliged to accept payment before the time appointed for payment in the mortgage. See chapter 25, Action for Redemption, Sec. 252. If, however, he accepts payment in advance, the defeasance clause will operate to revest the estate.

(d) See chapter 3, Legal Mortgage in Equity, Sec. 22.

(e) See chapter 2, Mortgage at Common Law, Sec. 12.

An effectual release of a debt, whether express or implied from conduct, discharges all securities for the same, whether original or collateral in the hands of the creditor, but (except as above stated) reconveyance is necessary to revest the legal estate in the mortgagor (g). The mortgagee's legal estate will, however, be extinguished if the mortgagor remains in adverse possession for the statutory period (h).