The client
A self-build near Sorel-Tracy had $185,000 already drawn, interest-only, on its construction mortgage.
Drawn balance
$185,000
Interest-only, at the time the draw was held
Held draw
$46,000
Next scheduled draw, frozen pending licence reinstatement
Delay
~2 weeks
Time to reinstate the RBQ licence and insurance
Interim rate
6.35%
On the drawn balance during the delay
The problem
Quebec requires most residential general contractors to hold a valid licence issued by the Régie du bâtiment du Québec (RBQ), which in turn depends on the contractor carrying the liability insurance the licence requires. Let either lapse, and the contractor is, at that moment, not legally licensed to perform the work at all.
What actually froze the draw
- ▸The general contractor's own liability-insurance policy lapsed on renewal, taking the RBQ licence itself out of good standing
- ▸Nothing was registered against the property -- no lien, no hypothec, no holdback percentage
- ▸The lender's own construction-draw policy simply will not fund against work performed by an unlicensed contractor, for its own legal and insurance protection
The work itself was fine. The problem was entirely the contractor's own paperwork with the regulator, not anything registered against the property or owed to a subtrade.
The numbers
Once the licence question was framed correctly, the actual cost of the delay was simple interim-interest arithmetic on the balance already drawn.
| The cost of the delay | Amount |
|---|---|
| Drawn balance, interest-only | $185,000 |
| Annualized interest at 6.35% | $11,748 |
| Interim-interest cost of the ~2-week delay | $490 |
| Item | Figure |
|---|---|
| Drawn balance at the time of the hold | $185,000 |
| Interim rate | 6.35% |
| Roughly half a month of that annual interest | $490 |
| Held draw, released once the licence was reinstated | $46,000 |
$490 is the entire real cost of this file's delay -- consistent with how small an interim-interest gap actually runs relative to the scale of residential construction investment a project like this represents. The $46,000 draw itself was never lost, just paused.
The solution
A courtier hypothécaire licensed under Quebec's Act respecting the distribution of financial products and services worked the licensing problem as its own, separate track from the construction schedule.
First, confirmed directly with the RBQ what specifically had lapsed -- the liability-insurance requirement attached to the licence, not the licence exam or qualification itself.
Second, had the general contractor renew the lapsed insurance and obtain the RBQ's own confirmation of reinstatement, rather than accepting the contractor's word that it was "being taken care of."
Third, supplied the lender with the reinstated licence and certificate of insurance directly, which is what actually released the held draw -- no change to the construction mortgage's own terms or rate was ever needed.
The outcome
The draw released once the RBQ licence was reinstated, at a total interim-interest cost of $490 for the delay -- the construction mortgage's own terms and rate never changed.
Because this file is uninsured, CMHC's ratio maximums do not apply; the numbers here are the direct cost of the delay itself, not a debt-service calculation.
What to take from this file
- 01An RBQ licence lapse is a contractor-licensing problem, not a lien or a holdback. Nothing is registered against the property, and no subtrade is owed anything -- the issue sits entirely between the contractor and the regulator.
- 02Confirm directly with the RBQ what actually lapsed. A licence, its underlying qualification, and its attached insurance requirement are three different things that can fail independently.
- 03A lender's own policy against funding unlicensed work is a real, legitimate protection, not an arbitrary delay -- expect it, and plan for the reinstatement timeline.
- 04The real cost of a short licensing delay is usually small. This file's entire cost was interim interest on a balance already drawn, not a lost draw or a broken project.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸6.35% interim interest rate — rates move daily; not a quote.
- ▸the roughly two-week delay — how long an RBQ licence reinstatement takes depends on the specific lapse and the regulator's own processing time; this file is illustrative.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.