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Hard Money Second Trust Deed for Canada

Hard Money Second Trust Deed Template for Canada

A Hard Money Second Trust Deed is a secured lending document used in Canadian jurisdictions that establishes a second-position security interest in real property. This document outlines the terms and conditions of a private, typically short-term, high-interest loan secured by real estate, subordinate to an existing first trust deed. It includes detailed provisions for interest rates (complying with Canadian usury laws), payment terms, default remedies, and the specific rights and obligations of all parties involved. The document incorporates provincial-specific requirements for property security registration and enforcement, while acknowledging the superior position of the first trust deed holder.

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What is a Hard Money Second Trust Deed?

A Hard Money Second Trust Deed is utilized in Canadian real estate financing when a borrower requires additional funding beyond their first mortgage, typically in situations where conventional lending isn't suitable or available. This document is essential for private lenders providing short-term, higher-interest loans secured by real estate that already has a primary mortgage. The agreement must comply with provincial property laws and federal interest rate regulations while protecting the lender's security interest in a subordinate position. It's commonly used in time-sensitive situations such as business opportunities, construction projects, or debt consolidation, where the borrower has sufficient equity in the property but may not qualify for traditional financing. The document includes comprehensive details about the security interest, payment terms, borrower obligations, and remedies available to the lender, while acknowledging and working within the constraints of being in second position to the first trust deed.

What sections should be included in a Hard Money Second Trust Deed?

1. Parties: Identification of the Lender, Borrower, and Trustee, including full legal names and addresses

2. Background: Context of the loan agreement, acknowledgment of first trust deed, and purpose of this second trust deed

3. Definitions: Key terms used throughout the document, including specific definitions related to second position lending

4. Trust Property: Detailed legal description of the property being used as security

5. Secured Obligations: Description of the debt and other obligations secured by this trust deed

6. Interest Rate and Payment Terms: Specification of interest rate, payment schedule, and calculation methods in compliance with Canadian interest rate laws

7. Security Grant: Legal language creating the security interest in the property

8. Priority and Subordination: Clear acknowledgment of first trust deed priority and terms of subordination

9. Borrower's Covenants: Borrower's obligations including property maintenance, insurance, taxes, and other standard requirements

10. Default Provisions: Definition of default events and cross-default with first trust deed

11. Remedies: Lender's rights and remedies upon default, including foreclosure process

12. Notice Requirements: Process and requirements for serving notices between parties

13. Due on Sale: Terms regarding loan acceleration upon property transfer

14. Governing Law: Specification of applicable Canadian provincial law

15. Execution: Signature requirements and acknowledgment provisions

What sections are optional to include in a Hard Money Second Trust Deed?

1. Cross-Collateralization: Section to be included if additional properties are being used as security

2. Personal Property Security: To be included if personal property is also being taken as additional security

3. Environmental Provisions: Detailed environmental warranties and indemnities, necessary for commercial properties

4. Assignment and Syndication: Include if the lender may want to assign or syndicate the loan

5. Construction Provisions: Required if loan proceeds will be used for construction or improvements

6. Prepayment Provisions: Include if there are specific prepayment penalties or requirements

7. Guaranty Provisions: Include when there are personal or corporate guarantors

8. Lockbox Requirements: Include for commercial properties with rental income

What schedules should be included in a Hard Money Second Trust Deed?

1. Schedule A - Legal Description: Detailed legal description of the property

2. Schedule B - Permitted Encumbrances: List of allowed liens and encumbrances, including first trust deed details

3. Schedule C - Payment Schedule: Detailed amortization and payment schedule

4. Schedule D - Insurance Requirements: Specific insurance requirements and minimum coverage amounts

5. Schedule E - Environmental Reports: List of environmental reports and findings (if applicable)

6. Appendix 1 - First Trust Deed Summary: Key terms and conditions of the first trust deed

7. Appendix 2 - Guarantor Information: Details of guarantors if applicable

8. Appendix 3 - Property Photographs: Recent photographs of the property and improvements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Trust Deed

Cost

Free to use
Relevant legal definitions













































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Relevant Industries

Real Estate

Private Lending

Commercial Property

Residential Property

Construction

Property Development

Alternative Financing

Investment Banking

Mortgage Banking

Real Estate Investment

Relevant Teams

Legal

Real Estate Finance

Credit Risk

Compliance

Commercial Lending

Investment

Property Management

Loan Administration

Due Diligence

Document Management

Relevant Roles

Real Estate Attorney

Mortgage Broker

Private Lending Manager

Real Estate Investment Manager

Credit Risk Officer

Loan Officer

Property Developer

Real Estate Investor

Commercial Banking Officer

Legal Counsel

Mortgage Administrator

Trust Officer

Compliance Officer

Real Estate Finance Manager

Investment Director

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