Form 57 - Draft Information statement - mortgages [F - Rescinded]
| Published Date: | 1998-02-06 |
|---|---|
| Effective Date: | 1998-02-04 |
| Rescinded Date: | 2001-06-30 |
[This is the form required under sections 92(2)(b) and 131(2)(b) of the Securities Rules, B.C. Reg. 196/97, for a distribution of a mortgage or qualified syndicated mortgage.]
DRAFT FORM 57
Securities Act
INFORMATION STATEMENT
MORTGAGES
ITEM 1 Non-review by Commission
State in bold print on the face page of the information statement:
No securities commission or similar regulatory authority has passed on the merits of the mortgage offered nor has it reviewed thisinformation statement and any representation to the contrary is an offence.
Please refer to page ___ for a discussion of the Risk Factors.
ITEM 2 Restrictions on Transfer and Market
If the mortgage is a qualified syndicated mortgage,
(a) state in bold print on the face page of the information statement:
There are restrictions on the transfer of this mortgage.
(b) provide a description of those restrictions in the body of the information statement. The face-page should provide a cross-reference to the discussion in the body of the information statement, and
(c) state in bold print on the face page of the information statement:
There is no assurance that there will be a market for the resale or transfer of this mortgage.
ITEM 3 Description of the Offering
(1) Briefly describe the nature of the investment offered and include any material attributes and all entitlements of the lender, including, but are not limited to, details of the following:
(a) the property being mortgaged;
(b) the state of title of the property, including material terms of any other mortgages and prior encumbrances on the mortgaged property;
(c) the material terms of the mortgage (including the principal amount, term, interest rate, maturity date, prepayment penalty and amortisation, the loan to value ratio and the investor’s rights and interest under the mortgage);
(d) the aggregate dollar amount of funds being raised; and
(e) where the mortgage has been registered and funded and is subsequently sold, the status of any payments.
(2) If a minimum amount of funds is required to be raised through the offering, disclose the date by which the minimum amount must be met and the consequences to the lender of the failure to raise that amount, including the return of funds to the lender and any deduction or penalty imposed. State the name and address of any person who will hold subscription funds until the minimum amount is raised.
(3) If there are any arrangements under which any part of the net proceeds will be held in trust or will only become available to the borrower if certain conditions are fulfilled, describe those conditions and the procedure for the return of funds to the lender if the conditions are not met and any deduction or penalty imposed.
(4) Describe the means by which the mortgage will be distributed and the subscription procedure. State the name of the mortgage broker, any relationship between the mortgage broker and the borrower, particulars of any agency or similar agreement and the remuneration, if any, to be paid to the mortgage broker for the sale of the mortgage.
ITEM 4 Administration agreement
If fees or expenses are to be charged to the lender for administration of this mortgage by the mortgage broker or related parties, an administration agreement, satisfactory to and agreed upon in writing by the lender, must be signed by the mortgage broker and provided to the lender. The administration agreement, in addition to specifying all fees and expenses to be charged to the lender, should clearly outline the specific responsibilities of all parties to the agreement, including collection responsibility of payments due under the mortgage, commencement of legal activity on default, follow up on fire insurance expirations or cancellations and all other matters of administration to be provided or excluded by the mortgage broker.
ITEM 5 Trust indenture
Disclose the terms of any trust indenture. The trust indenture, in addition to specifying all fees and expenses to be charged to the lender, should clearly outline the specific responsibilities of all parties to the agreement, including collection responsibility of payments due under the mortgage, commencement of legal activity on default, follow up on fire insurance expirations or cancellations and all other matters of administration to be provided or excluded by the trustee.
Instructions:If the mortgage is a qualified syndicated mortgage, there is a requirement that the trustee be a registered trust company.
ITEM 6 Accredited appraisal
Provide details of the most recent assessment of the land and existing improvements by the British Columbia Assessment Authority and any appraisal of the value of the land and existing improvements as of the date of the appraisal by a professional appraiser.
Instructions:For a qualified syndicated mortgage, where there has been a substantial change in the condition or market value of the property since the assessment by the British Columbia Assessment Authority, an appraisal is required by an appraiser who is a member of the Appraisal Institute of Canada or the Real Estate Institute of British Columbia.
ITEM 7 Guarantees or Other Similar Financial Commitments
(1) Attach as an appendix to the information statement a copy of any personal covenant, guarantee or other similar financial commitment agreement provided in connection with the offering.
Instructions:If the mortgage is a qualified syndicated mortgage, personal covenants, guarantees and other similar financial commitments may be provided only by the borrower or a director or officer of the borrower.
(2) Summarize, in plain language, the key terms of any personal covenant, guarantee or other financial commitment. Provide an illustration of how the personal covenant, guarantee or financial commitment works.
(3) Where there is a personal covenant, guarantee or other financial commitment, disclose the financial position and business experience of the person providing such personal covenant, guarantee or other financial commitment.
(4) Where there is a personal covenant, guarantee or other financial commitment, indicate whether holders of the mortgage will be entitled to ongoing disclosure of the financial position of that person during the period of guarantee or commitment, and if so, the nature, verification, timing and frequency of, as well as access to, the disclosure that will be provided to holders.
ITEM 8 Risk Factors
(1) State in bold print:
There are risks associated with this mortgage investment.
(2) Disclose the risk factors that make the offering a risk or speculation.
Instructions:Risk factors may include, but are not limited to, such matters as reliance on the ability of the borrower to make payments under the mortgage, the financial strength of any person offering a personal covenant, guarantee or financial commitment, changes in land value, the ability to recover one’s investment in the event of foreclosure, borrower/mortgage broker conflicts of interest, the mortgage broker’s efforts, ability and experience, risks relating to building construction, inability to change the trustee, and restrictions on transfer of the mortgage.
(3) If the mortgage includes a personal covenant, guarantee or other financial commitment, state in bold print:
The ability of [the person providing the personal covenant, guarantee or other financial commitment] to perform under the [personal covenant, guarantee or other financial commitment] will depend on the financial strength of [the person]. There is no assurance that [the person] will have the financial ability to be able to satisfy its obligations under the [personal covenant, guarantee or other financial commitment] and therefore you may not receive any return from your investment, including any initial amount invested.
ITEM 9 Borrower, Mortgage Broker, Manager, Directors, Officers and Principals
(1) Provide the name, municipality of residence and principal occupation for the last 5 years of the borrower, the mortgage broker and the person managing the mortgage (the "manager"), where the borrower, mortgage broker or manager is an individual, or of the directors, officers, and any persons holding directly or indirectly more than 50% of any class of voting securities ("principal holders"), of the borrower, mortgage broker or manager, where the person is not an individual.
(2) Disclose, to the best of the mortgage broker’s knowledge, whether:
(a) the borrower, mortgage broker, manager or principal holders, or
(b) any director or officer of the borrower, mortgage broker, manager or principal holder,
within the ten years before the date of the information statement, has been subject to any penalties or sanctions imposed by a court, mortgage regulatory authority, real estate regulatory authority or securities regulatory authority relating to the sale, lease, promotion, or management of mortgages, real estate or securities, or to theft or fraud, and describe any penalties or sanctions imposed.
(3) Disclose, to the best of the mortgage broker’s knowledge, whether the borrower, mortgage broker, manager, any director, officer or principal holder of the borrower, mortgage broker or manager, or any director or officer of the principal holder, within the five years before the date of the information statement, was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or has been subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person.
(4) Disclose, to the best of the mortgage broker’s knowledge, whether any director, officer or principal holder of the borrower, mortgage broker or manager, or any director or officer of the principal holder, within the five years prior to the date of the information statement, has been a director, officer or principal holder of any other mortgage broker or manager that, while that person was acting in that capacity, that other mortgage broker or manager
(a) was subject to any penalties or sanctions imposed by a court, mortgage regulatory authority, real estate regulatory authority or securities regulatory authority relating to the sale, lease, promotion, or management of mortgages, real estate or securities or to theft or fraud, and describe any penalties or sanctions imposed, or
(b) was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.
ITEM 10 Conflicts of Interest
Describe any existing or potential conflicts of interest among the borrower, mortgage broker, manager, any directors, officers and principal holders of the borrower, mortgage broker and manager, any directors and officers of the principal holders, and any person providing goods or services to the borrower, mortgage broker, manager or holders of the mortgage in connection with the mortgage that could reasonably be expected to affect the lender's investment decision.
Instructions:Any direct or indirect interest of the mortgage broker or related parties in the property, mortgage or business of the borrower must be disclosed.
ITEM 11 Borrower’s Financial Information
Where the borrower is a person other than a natural person and has prepared financial statements, those financial statements must be included in the information statement.
ITEM 12 Borrower disclosure statement
The mortgage broker must attach a copy of the disclosure statement required by the Mortgage Brokers Act to be provided to the borrower under this mortgage concerning all fees (by whatever name called) charged to the borrower in addition to interest and reasonable assessment, appraisal, survey and legal fees.
ITEM 13 Registration documentation
State:
In addition to all other material and documentation reasonably requested and mutually agreed upon, the lender should request, either from the lawyer or notary acting on the lender’s behalf, or from the mortgage broker, the following documentation after the completion of registration and disbursement of the mortgage:
(a) copy of registered mortgage (and transfer of mortgage document if applicable);
(b) confirmation signed by any prior encumbrancers confirming the outstanding balance of the same and that the prior encumbrances are not in arrears;
(c) written confirmation of valid fire insurance on the property, and the same should reflect the interest of the lender as it may appear;
(d) written confirmation there are no outstanding arrears or delinquent municipal property taxes on the property;
(e) State of Title Certificate in due course (within 120 days); and
(f) copy of trust indenture (if applicable).
ITEM 14 Certification by Mortgage Broker
Include a certificate in the following form:
The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made.
Instructions:The certificate is required to be signed by the president or chief executive officer and by the chief financial officer of the mortgage broker. If no chief financial officer has been designated, then a director of the mortgage broker other than the president or chief executive officer must sign the certificate.
ITEM 15 Certification by Borrower
Include a certificate in the following form:
The foregoing contains no untrue statement of a material fact relating to the borrower and does not omit to state a material fact relating to the borrower that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made.
Instructions:The certificate is required to be signed by the borrower, where the borrower is an individual, or the president or chief executive officer and by the chief financial officer of the borrower, where the borrower is not an individual. If no chief financial officer has been designated, then a director of the borrower other than the president or chief executive officer must sign the certificate.
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IT IS AN OFFENCE UNDER THE SECURITIES ACT FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED, FURNISHED OR DELIVERED UNDER THE ACT OR THE REGULATIONS THAT, AT THE TIME AND IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION AS THAT TERM IS DEFINED BY THE SECURITIES ACT.