Form C Priority Agreement: An Overview
When it comes to securing financing for a real estate transaction, a priority agreement can play a crucial role. One type of priority agreement is the Form C Priority Agreement, which is often used in Canadian real estate deals.
What is a Form C Priority Agreement?
A Form C Priority Agreement is a legal document that outlines the priority of the different parties involved in a real estate transaction. It is typically used when multiple parties have a financial interest in the property, such as a mortgage lender and a vendor take-back mortgage.
This agreement is registered on the property`s title to ensure that everyone involved in the transaction is aware of the priority of their financial interest in the property. The priority agreement lays out the order in which the different parties have the right to be paid in case of a default on payments or foreclosure.
Why is a Form C Priority Agreement Important?
A Form C Priority Agreement is important because it protects the financial interests of all parties involved in a real estate transaction. It sets out the clear priority of each party`s interest in the property, which can help avoid confusion and disputes down the line.
For example, if a borrower defaults on their mortgage payments, the lender will have the first right to the funds obtained from the sale of the property. If there are two or more lenders involved, a priority agreement can set out the order in which each lender will be paid.
In cases where there is a vendor take-back mortgage, the vendor`s interest may be subordinate to the lender`s interest. A priority agreement can set out the priority of the vendor`s interest in such a case.
How is a Form C Priority Agreement Structured?
A Form C Priority Agreement typically includes the following details:
– The legal names of all parties involved in the transaction
– The amount of each party`s financial interest in the property
– The priority of each party`s interest in the property
– The name and contact information of the lawyer who drafted the agreement
– Any special conditions or specific provisions related to the agreement
The agreement is usually signed by all parties involved in the transaction and is registered on the property`s title.
Conclusion
A Form C Priority Agreement is a crucial document in real estate transactions involving multiple parties. It sets out the priority of each party`s interest in the property to ensure that their financial interests are protected. Any mistakes in the priority agreement can lead to costly disputes and legal battles. Therefore, it`s important to have an experienced real estate lawyer draft and review the priority agreement to ensure it meets all legal requirements.
