Canada Revenue Agency Deemed Trust
A borrower was in default of an insured mortgage and our insured lender was selling the property under power of sale. Prior to the completion of the lender's power of sale proceedings, the lender received a notification from the Canada Revenue Agency (CRA) claiming a super priority lien on the property. As a result of the lien claimed by the CRA, the lender would experience a deficiency in its recovery.
The notice was with respect to arrears of source deductions for Canada Pension Plan and Employment Insurance remittances. The amount claimed was over $35,000.
Coverage in Action: The lender was able to confirm with the CRA that prior to the advance of the mortgage, $12,000 of the $35,000 was deemed to be owed by the borrower for source deductions. Upon sale of the land, the lender remitted the amount of the super priority liens to the CRA. Stewart Title reimbursed the insured lender $12,000 (the amount of their loss) as a result of the portion of the super priority lien which arose prior to the mortgage being advanced.