We had a 2nd mortgage on our property that was discharged dec 2004, and now the person has got a certificate pending litigation filed and statement of claim filed as of July 2007. We are representing ourselves and I think it fall outside the statue of limitations.
I also think that a discharged mortgage is just that??

ScottGem

I'm still bothered by this word discharge. I'm not sure if the debt was actually discharged or not. I think, in order to refinance, your bank said that you had to remove the second lien as an encumbrance so their interest would be preserved. So I'm guessing your father-in-law discharged the lien but not the debt.

However, if you have some papwerwork that says the debt balance was discharged and the balance was Nil, then he can't sue for the balance. I doubt if the SOL has passed in only 2 years.

But it all hinges on the definition of discharge. What EXACTLY does your paperwork say?

wendylefler

The discharge papers say the 2nd mortgage and the instument # was completely discharged. We were then able to increase our new first mortgage. There were no conditions.
I think that the statue of limitations in Ontario is 2 years now?

LisaB4657

The word "discharge" isn't really important here. What I don't understand is, if your f-i-l gave your husband an "early inheritance", why does your husband have to pay it back? A mortgage is given as security for the repayment of a debt. Did your f-i-l loan your husband the money or give him the money? If he loaned him the money then he will have a hard time proving to a court that it was a loan and not a gift. If he gave him the money then he is not entitled to a lien for securing repayment.

Also, if the money was a loan then your f-i-l did not have to discharge the mortgage when you refinanced. All he had to do was sign a subordination of mortgage and the lender would have gone ahead with the refinance.

So when your f-i-l gave the money to your husband, was it a loan or an early inheritance?

wendylefler

My husband was told by his father that it was a gift of an early inheritance, but that he had to sign papers allowing his father to put the money down on the house my husband was buying. To my husbands surprise when I came along, he had signed on to a second mortgage with his father. He didn't know what he had signed. any way we visited the laywer who drew this up and she gave us a statement of mortgage, balance owing NIL.
We went to get a new first morgage and the bank told his father that he needed to discharge the 2nd mortgage, as the repayment was balance owing NIL, was absurd. F I L signed to have it discharged and we have the discharge paper from the land registry office. Discharged in Dec 2004. Now in July 2007 F I L has decided he wants the money he gave his son secured in the form of a second mortgage again. We are refusing now at this point since we got court papers. We feel it falls now under the Statue of limitations?

LisaB4657

The Statute of Limitations may merely be one defense against the lawsuit by your f-i-l. A much stronger defense is the fact that there is no money due from your husband to your f-i-l. Your f-i-l issued a written statement that there is no balance owing and he also told your husband that it was a gift, not a loan. So how is he going to prove to a court that your husband owes him the money?

A lien can only secure money given as a loan, not a gift.

wendylefler

He had my husband sign on to a 2nd mortgage in the beginning, and he has that. But since that we have the discharge paper saying, it was discharged. The bank manager had him discharge it because the balance read NIL. The laywer who wrote up the original second mortgage explained to us that there was no balnce owing as it was an early inheritance, and it was just there to secure the money givin to my husband. and gave us the statement showing NIL. That is why the bank had him discharge it. We needed to refinance a new first mortgage and the bank said that he had to release that 2nd. He did, but now he wants to secure it again. He staes in his statement of claim that he has repeatedly asked us to sign back on, and that we have refused. He is using his old mortgage doc's to prove that there was a debt. My husband didn't know he had even signed on to it to begin with.

LisaB4657

Your f-i-l cannot get a lien against the property unless he can prove that your husband owes him money. The old mortgage docs will not prove that there is a debt because your f-i-l issued a statement of mortgage showing a $0 balance.

Does your f-i-l expect your husband to pay the money back?

wendylefler

In the beginning , no, but since my husband and I almost separated he now wants it secured again. Now he is saying he wants the money back or secured, so that incase we don't make it, It will be paid back as a debt? My husband and I are going to make it

LisaB4657

Well, based on what you've said here I can't see how your f-i-l has a hope or prayer of getting the money or the lien unless your husband gives it to him voluntarily.

I strongly recommend that you and your husband not sign anything without the advice of an attorney who represents you. (This means that you should not rely on the advice of an attorney who represents your lender or your f-i-l!!)

Hang in there and good luck!

ScottGem

As Lisa is saying (and I should have picked up on), this was a gift. Tell your f-i-l to sue you if he wants, since you have documentation that the lien was discharged and the balance nil and you ave his statement that the money was an early inheritance, ergo a gift, he doesn't have a leg to stand on.