Secured parties (including lenders) of, to or in respect of Saskatchewan debtors or Saskatchewan land or personal property should be aware of two debtor-friendly statutes that are unique to the province: The Land Contracts (Actions) Act (Saskatchewan) (the “LCAA”) and The Limitation of Civil Rights Act (Saskatchewan) (“LCRA”).
In respect of security on land, the LCAA protects debtors by requiring mortgagees to obtain leave of the Court before commencing an action for foreclosure of the equity of redemption, the sale or possession of the mortgaged premises and the recovery of monies in or under the mortgage. The LCAA prescribes timelines that, in effect, delay enforcement so as to give the debtor additional time to pay arrears, refinance the property or otherwise cure the default. As well, in some circumstances (generally, where the mortgage is given to secure the purchase price of part of the purchase price of land) the mortgagee’s remedies might be limited to the land (and buildings) and no action lies on the debtor’s personal covenant (which among other matters would prevent the lender from pursuing the debtor for any deficiency).
In respect of security on personal property, under the LCRA, where the secured party is a vendor (or has acquired the interest of a vendor), the secured party is limited to repossessing and selling the personal property collateral and cannot sue on the personal covenant of the debtor (thereby preventing the recovery of any deficiency from the debtor). As well, in respect of certain types of personal property a complex notice and (potential) Court hearing regime will apply.
So what choice does a lender have to avoid these onerous and debtor-friendly statutes? If the debtor is a corporation it can agree (in writing) that either or both statutes do not apply. However, debtors that are not corporations (such as individuals) cannot so agree, and any such agreement purporting to waive those statutes is null and void.
As such, it is important that lenders be aware of the LCAA and the LCRA and include the appropriate language in their security documents.
Note that if the debtor is a farmer, the subject land is farm land, or the personal property is used in farming, then different or additional considerations apply (including as a result of the application of The Saskatchewan Farm Security Act (Saskatchewan) (the “SFSA”)).
The foregoing explanation is very much a high-level summary of a few aspects of the LCAA and the LCRA. If you have any questions regarding the LCAA or the LCRA, please contact Kelly A. C. Waddell.
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