Toronto Commercial Loan Agreement Litigation Lawyers
Commercial Lending Disputes and Litigation
Secured and Unsecured Loan Agreement Litigation in Ontario
Promissory Note | Letter of Credit Litigation Lawyers
Mortgage Enforcement and Litigation | Line of Credit Disputes
Claims on Guarantees | Defence of Guarantors
Syndicated Mortgage Investment Disputes
We are often retained to advise and act for lenders, borrowers or guarantors in disputes relating to lending.
Lending of substantial sums usually is secured against assets of the borrower. We have been retained in relation to both secured and unsecured lending. The purposes for lending and borrowing are diverse, sometimes relate to one specific asset or project, while in other occasions are simply to assist with cash flow and meeting smaller current debts. Project finance, debt financing, bridging loans, land loans, construction loans, and mezzanine financing are examples of larger lending situations where disputes sometimes arise.
Secured and Unsecured Lending Litigation
Mortgage lending secured on the asset purchased or improved is one of the most common forms of loan disputes. Knowledge of rights, remedies, including priorities, and the relative advantages and disadvantages of procedural steps is important when considering how to enforce and recover a debt. Mortgages can be legal and registered, but sometimes courts have recognized unregistered “equitable” mortgages. The prospect of insolvency when a loan is unsecured gives rise to numerous legal issues.
Commercial and Personal Lending
Lending is not restricted to commercial and business entities, but often takes place between people having a family or personal relationship. The law of gift and presumptions of advancement sometimes come into play in considering the rights and remedies of those involved in such non-arm’s length transactions. Often the informality and lack of independent legal advice affects the rights and remedies of the parties to the transaction. Institutional lending for personal loans is often by line of credit (secured or unsecured) or mortgage.
Because we often act in proceedings in Ontario having an international or cross-border dimension, we are often retained in cross-border disputes and litigation concerning the advance of substantial sums. One of the parties may be located outside Ontario, but the transaction may be been concluded in Ontario.
Some lending agreements expressly agree the forum for dispute resolution and enforcement and the choice of governing law, while other loan agreements are silent on the choice of forum and law and may become the subject of conflict of laws analysis, jurisdictional challenges or the application of foreign law in local litigation.
The limitation period for the recognition and enforcement of the loan obligation may be that set out in local or foreign law and we are often consulted to advise clients on that question.
It is vital to know the limitation period which applies to the lending, and the rights and remedies when a loan is not paid on time, or at all, since the passage of time before the commencement of proceedings in the proper jurisdiction may a bar the recognition and enforcement of the debt and recovery of the loan.
Common Issues in Loan Litigation
The lending or advance of sums may be part of a larger transaction which has impact on a loan agreement or promissory note. What are described as loans are sometimes in reality a gift, part of a hire-purchase arrangement or payment with another purpose, such as when purchases are made for others having the true beneficial interest. The liability, or alternatively the release from liability of guarantors is often litigated. Of course the formal legal requirement of a legally-enforceable loan often is the subject of a dispute. Settlement, assignment, and forgiving loans has been the subject of loan litigation.
Other examples of loan/lending issues include:
- Money paid to third parties
- Statutory regulation of lending and credit
- Interest: legality, rate and calculation
- Implied promises to pay
- Borrowers not personally liable to pay
- Onus and presumption of advancement
- Timing of contractual obligation of payment
- Void and Illegal loans
- Discharge of Guarantors
We have considerable experience acting for clients either appropriately seeking or responding to urgent equitable remedies. Where there is an imminent risk of the dissipation of a borrower / debtor’s assets, including the sums lent, which would cause irreparable harm, a lender may be entitled to urgent relief, including freezing of assets or accounts.
If you are a lender, a borrower or guarantor of a debt obligation, and a dispute or litigation has arisen, please contact Gilbertson Davis LLP for an initial consultation.