Suddenly, the bank pauses the approval, the mortgage instructions are withdrawn, and the homeowner is told that no funds can be released until the title issue is resolved.
If a Certificate of Pending Litigation is blocking your refinance in Ontario, the problem is not necessarily the value of your home. The problem is that an unresolved legal claim may affect ownership, title or the lender’s ability to enforce its mortgage security.
Why a Certificate of Pending Litigation Stops Mortgage Financing
A Certificate of Pending Litigation, commonly called a CPL, warns that a legal proceeding may affect an interest in the property. Because the outcome could change who owns the property or how it can be dealt with, many institutional lenders will not complete a conventional mortgage while the CPL remains registered.
The homeowner may still have substantial equity, reliable income and a history of making mortgage payments. However, a bank generally wants clear and marketable title before advancing funds.
This can become urgent when an existing mortgage is maturing, a court settlement must be funded, legal bills are increasing or the homeowner needs money to resolve the dispute.
Can Home Equity Help Resolve the Problem?
Depending on the nature of the litigation, the available equity and the advice of the homeowner’s lawyer, a short-term private mortgage in Ontario may provide a path forward.
A private lender may review the property value, existing mortgages, amount required, legal claim and proposed exit strategy differently from a traditional bank. In some cases, financing can be structured to pay an agreed settlement, discharge another obligation or provide time for the legal proceeding to be resolved.
This does not mean every property with a CPL can be financed. The lender and its lawyer must understand exactly what the registration protects and whether a new mortgage can legally obtain acceptable security.
What Should You Do Before Applying?
Your real estate or litigation lawyer should confirm why the CPL was registered, what amount or remedy is being claimed, whether the claimant will cooperate with a settlement and what must happen before the registration can be removed.
Lendworth can then review whether a mortgage refinance, private first mortgage or other equity-based structure may work alongside the legal solution.
The strongest applications include a current mortgage statement, property-tax information, an estimated property value, the CPL documents, the amount required and a clear explanation of how the proposed mortgage will eventually be repaid.
If a Certificate of Pending Litigation is blocking your mortgage and a deadline is approaching, call Lendworth at 905-597-1225 or request a mortgage review.
Your Equity Deserves More.