What if I have a private lender?
What if I have a private lender? Read this first — it will change how you sell, buy, or refinance in Milton.
Quick, Real Talk
If you’re a homeowner, buyer, or investor in Milton and you borrowed from a private lender, what you do next determines whether you keep control or hand it to someone else. Private lending is fast and flexible. It can also be risky if you treat it like a handshake loan. This guide tells you exactly how to protect your title, protect your equity, and close deals in Milton without surprises.
Why private lenders show up in Milton
Milton is growing fast. New commuters, limited inventory, and renovation-driven flipping make private loans common. Private lenders move quickly — they fund when banks say no or when time is tight. That’s great for deals. But if paperwork, priority, and enforcement aren’t handled right, private loans become legal knots tied to your property.
The core difference: registered vs unregistered
- Registered mortgage (on title): The lender’s interest is recorded at the Land Registry/Land Titles office. This gives priority and a clear enforcement path (power of sale).
- Unregistered loan (informal promissory note): The lender is unsecured until they get a court judgment or register something later. That costs time and weakens their position — but it also complicates your sale or refinance if it’s not cleaned up.
If a private lender is not registered, you can still be in trouble. They can sue, get a judgment, and register that judgment against your property. Always assume the worst and act fast.
What happens if you default to a private lender in Ontario
Ontario uses power-of-sale remedies for mortgages. If the private lender has a properly registered mortgage, they can enforce it through power of sale. That means the property can be sold and you lose equity. If the loan was unregistered but the lender gets a judgment, they may register a writ of seizure and sale. Either way, title problems can block buyers or bank financing.
Unique Milton considerations
- Fast sales and investor activity: Milton buyers and flippers often use private capital to close quickly, increasing prevalence of short-term private mortgages.
- Commuter demand: Buyers often refinance for moving costs — private mortgages can delay or block those moves without a clean discharge.
- Local lawyers and lenders in Halton Region know this market. Use someone experienced with Milton title searches, builder liens, and municipal tax issues.
Construction liens and priority issues
Construction liens under Ontario’s Construction Act can reach back to when work began and may take priority over previously registered mortgages in certain circumstances. If you had renovations or contractors working before a private mortgage was registered, a builder’s lien could complicate priority and payout. Always run a construction lien search when selling or refinancing.
Step-by-step action plan — if you have a private lender
- Get your paperwork together now. Promissory notes, mortgage documents, statements, and any emails.
- Do a title search. Find out what’s registered against your property: mortgages, judgments, writs, or construction liens.
- Ask the lender for a payoff statement and demand the exact payout amount and discharge procedure in writing.
- Call a Milton real estate lawyer — not an average conveyancer. You need someone who handles private mortgage discharges, subordination agreements, and power-of-sale defenses.
- If you plan to refinance with a bank, tell the bank about the private mortgage up front. Banks will either require the private mortgage to be paid or a subordination agreement.
- Consider title insurance. It won’t erase a registered mortgage, but it helps with some title risks and protects new lenders.
- If you expect trouble, negotiate a workout. Private lenders want money — and often they prefer a negotiated payout over a messy enforcement.
If you’re buying a property with a private mortgage on title
- Don’t assume the seller will clear it. Your lender and lawyer will require a clear title or proof of closing funds to discharge.
- Get the private lender’s payoff in writing before closing. If they stall, closing can collapse.
- Consider escrow holdback options. Your lawyer can hold sale proceeds until the private mortgage discharge is confirmed.
- If the private mortgage is unregistered, insist on searches and confirm there are no judgments or builders’ liens.
Refinancing or moving: bank vs private lender conflict
Banks won’t usually refinance over an unregistered private loan. They want the title clean or a signed subordination agreement. Subordination agreements allow your new bank to take priority but are not guaranteed — private lenders may refuse.
If the private lender refuses to subordinate: you’ll need to pay them out. That means selling the property, obtaining additional funds, or negotiating a new blended payoff.
Negotiation tactics that work in Milton
Be direct. Private lenders in the GTA and Halton Region are practical—they want return, not court battles. Use these tactics:
- Offer a short-term higher-rate bridge payoff with a defined timeline.
- Suggest partial payments and re-amortization to buy time.
- Offer a formal subordination agreement tied to a bank approval condition.
- Use a trusted Milton lawyer to draft a binding agreement; lenders respect paperwork.
Legal risks and protections
- Power of sale: If registered, a private mortgage can lead to a power-of-sale sale. You lose equity, not title, but practical result is loss of property.
- Foreclosure is rare in Ontario — power of sale is the primary remedy.
- Unpaid municipal taxes can lead to tax sale by the municipality — that takes priority over most claims.
- Builder’s liens and judgments can be registered quickly. Keep close tabs if work or legal actions occurred prior to your private loan.
Costs to expect
- Legal fees for discharge or subordination: $800–$2,500, depending on complexity.
- Title insurance: $300–$1,200 (depends on property value).
- Payoff penalties or negotiated premiums: private lenders may charge a fee or prepayment penalty.
- Court costs if litigation occurs: expensive. Avoid court unless necessary.
Best practices to prevent issues
- Always register the mortgage if you’re the lender or insist on a clean discharge if you’re the borrower.
- Use written payoff statements and discharges.
- Run title and lien searches before closing any transaction.
- Work with real estate lawyers experienced in Milton/Halton transactions.
The Milton edge: local resources and why they matter
Milton’s market moves fast and local professionals know how to clear titles quickly. Use a lawyer who understands:
- Halton Region’s municipal tax processes
- Construction lien timelines and local contractor patterns
- How local private lenders operate during a bidding war or tight closing window
If you need introductions to local lawyers experienced in private mortgage discharges and subordination agreements, call a local realtor who handles these issues every day.
Final checklist before you close or refinance
- Title search completed and clean
- Payoff statement from private lender in writing
- Lawyer engaged and ready to handle discharge
- No outstanding builders’ liens or municipal tax arrears
- Subordination agreement if refinancing with a bank
- Title insurance ordered (if required)
Bottom line
Private lenders are a tool. In Milton’s competitive market they get deals done fast. But speed without paperwork costs equity. Register mortgages, demand payoffs, and hire a local lawyer who knows Halton and construction lien rules. That’s how you keep control.
Authoritative FAQ — Private Lenders, Mortgages & Liens in Milton, ON
Q: How does a private mortgage differ from a bank mortgage?
A: Private mortgages are funded by individuals or private companies, often with faster approvals and higher interest. Bank mortgages come with stricter underwriting, lower rates, and usually require full registration and documentation. Both can be registered on title; registration determines enforcement rights.
Q: What if my private lender never registered the mortgage?
A: If it’s unregistered, the lender is initially unsecured. They can sue, get a judgment, and register that judgment. That will block sales and refinancing. Get legal advice immediately and ask the lender for a written payoff and discharge plan.
Q: Can a private lender force a sale of my Milton home?
A: If the private lender has a registered mortgage, they can enforce via power of sale under Ontario law. If they only have a judgment, they may register a writ and force seizure and sale. Both outcomes can remove your equity.
Q: How do construction liens affect private mortgages?
A: Construction liens can sometimes take priority depending on timing and the Construction Act rules. If work started before a mortgage was registered, a builder’s lien can complicate priority. Always run a lien search when selling or refinancing.
Q: Can a bank refinance if I have a private mortgage?
A: Yes — but usually only after the private mortgage is discharged or a subordination agreement is signed. Banks want first-priority security. If the private lender refuses to subordinate, the bank may refuse to lend.
Q: What should a buyer do when a home has a private mortgage registered?
A: Insist on a written payoff and discharge at closing. Use escrow holdbacks if there’s any doubt. Have your lawyer verify that the private mortgage is removed from title before final registries are completed.
Q: What are my options if I can’t pay off a private lender?
A: Negotiate: payment plans, temporary re-amortization, or a short-term bridge with formal terms. If negotiation fails, speak to a lawyer about restructuring or protective steps; court can be costly.
Q: Who should I call in Milton for help?
A: Call a real estate lawyer experienced in Halton Region for title, discharge, and lien work. For local market navigation, contact Tony Sousa — Milton realtor who handles private mortgage situations: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
If you want a free title checklist for your Milton property or help getting a payoff statement from a private lender, email Tony now. Don’t wait — title problems compound fast in this market.
