Expired four years ago, still on the register

Quebec's Expropriation Act lets a municipality freeze a property against construction or improvement while it decides whether to expropriate, by registering a reserve for public purposes against the land register. The freeze can run at most four years -- an initial two-year term, renewable once for a further two years -- after which the Land Register Officer must strike it, but only on an interested party's request.

The reserve had no legal effect left. Whether it still appeared to constrain the property was an entirely separate question, and the new lender's own counsel would not fund behind it either way.

With the reserve's expiry confirmed and a striking application filed, sizing the payout hypothec was ordinary arithmetic.

Switching a $148,000 balance from a 9.25% interest-only private rate to an amortizing institutional rate lowered the payment on its own -- the reserve was never a cost item in the payout figure, only a condition the register had to clear first.

A courtier hypothécaire licensed under Quebec's Act respecting the distribution of financial products and services treated the expired reserve as a register-clearing task with its own deadline, not a legal obstacle to selling or mortgaging the property.

First, obtained the city's own written confirmation of the reserve's original registration date and its abandoned status, establishing exactly when the four-year statutory maximum had actually run out.

Second, confirmed against the Expropriation Act's own two-year-plus-one-renewal ceiling that the reserve could not lawfully be extended any further, regardless of anything the city might still want to do with the corridor.

Third, had the notary apply to the Land Register Officer to strike the expired reserve ahead of registering the new hypothec, so the new lender's counsel had a clean register to rely on rather than the city's own letter alone.

The new hypothec funded at 5.35%, the expired reserve was struck from the register ahead of closing, and the private balance was paid out in full.

Because this file is uninsured, CMHC's ratio maximums do not apply directly; the 38.3% and 36.6% figures are informational.

• 01A registered reserve for public purposes does not last indefinitely. Quebec's Expropriation Act caps it at two years, renewable once, four years total.
• 02An expired reserve does not disappear from the land register on its own. Someone has to ask the Land Register Officer to strike it.
• 03A lender's counsel can be just as cautious about an apparently-live notation as a genuinely active one. Confirm the expiry in writing, then have it struck, rather than arguing the point at closing.
• 04This is a registry housekeeping problem with an ordinary hypothec payout underneath it. Once the register is clean, the arithmetic itself is routine.