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In real estate transactions across British Columbia, one of the most routine steps after a payout of an existing mortgage is obtaining the discharge. It sounds simple; the old lender gets paid, the lender files a Form C discharge, and title is cleared.
Except when it isn’t.
Recently, we handled a matter where our office fully paid out a client’s mortgage in September. That should have triggered the lender’s obligation to register a discharge. Months later, the discharge still hadn’t been filed. The new lender, frustrated and under pressure from its own compliance timelines, threatened to report counsel to the Law Society for the delay.
Situations like this raise some important questions:
Who is responsible for ensuring a discharge is filed? What can go wrong? And what risks arise when lawyers give undertakings on timelines they do not control?
While most major lenders file discharges promptly, delays can and do happen for several reasons:
Borrowers often assume the discharge is instant. But even the Land Title Office cannot act until the lender provides the signed Form C.
In BC conveyancing practice, it is standard for the vendor’s lawyer to undertake to the purchaser’s lawyer (or new lender’s lawyer) that they will:
1. Pay out the old mortgage
2. Obtain and register the Form C discharge within a “reasonable time.”
A key issue: lawyers rely on the cooperation of the outgoing lender, and that lender is not party to the undertaking.
When a lender delays a discharge, it puts the lawyer in the uncomfortable position of having promised something they cannot directly control.
They can, but it doesn’t mean the lawyer did anything wrong.
The Law Society recognizes that undertakings must be reasonable. If the selling/buying lawyer:
…then the delay belongs to the lender, not counsel.
A threat to “report to the Law Society” is often a pressure tactic. The proper legal remedy, if any, is against the lender, not the lawyer, as long as the undertaking is being diligently followed up.
For borrowers and lenders alike, this situation highlights key lessons:
1. A payout is not the same as a discharge.
Paying off the mortgage closes the debt, but it does not remove the charge from title until the lender files the Form C.
2. Lawyers cannot force lenders to act faster.
We can push, document follow-ups, escalate, and advocate. But the final signature must come from the lender.
3. Clear timelines in undertakings are crucial.
Undertakings should allow for “the typical processing time of the lender” rather than strict deadlines beyond counsel’s control.
4. Buyers and new lenders should expect discharge delays.
This is especially true with private lenders, smaller credit unions, or lenders with manual discharge processes.
In our matter, we escalated the issue to the lender’s discharge department, documented repeated reminders, and secured the Form C before the deadline. The new lender backed down, and the title was cleared.
The lesson?
At Sodagar & Company, we deal with these issues daily, from discharge delays to complex lending arrangements and high-pressure undertakings. If you’re facing a title issue, a stalled discharge, or need counsel who can navigate lender timelines efficiently and pragmatically, we’re here to help. Reach out to our real estate team for clear, practical solutions and responsive communication at every step.
