William and Tracy were a married couple. They took out a mortgage on their matrimonial home with Royal Bank. In the mortgage contract, the husband signed as a mortgagor, while the wife only signed as a third party "spouse". They defaulted on the mortgage for three months, and the bank is trying to foreclose on the house.
- Did the wife mortgage her interest in the home?
Judgement for the defendants.
MacLellan finds that the wife did not mortgage her interest in the home. If the bank had intended for this then they would have had her sign the mortgage as a mortgagor. All that she did was forfeit her Matrimonial Property Act rights in his interest in the house; she did nothing with her own interests. Therefore, she and her husband were just joint tenants, and it is clear that one joint tenant can mortgage their interest in a house without the consent of the other tenant. Therefore, the bank can only foreclose on William's half of the interest, so when they resell it they must advertise it as a 50% interest in the house.
- In order to mortgage your interest in a home you must sign the mortgage as a mortgagor.
- One spouse can consent to the other spouse mortgaging their half interest in the house – this forfeits the non-mortgaging spouse's rights to the other half of the interest, which now belongs to the bank; if this happens, the spouse and the bank become joint tenants, each owning 50% of the interest in the home.