What is Form 9D?
Form 9D is an official document used by Ontario lawyers as an investment authority for mortgages or charges on real property held in trust for clients. This form is required in a private mortgage transaction whether or not the mortgage was arranged by you. Have your client complete every point on this form, with “n/a” being noted if the point is not applicable.
Before reading on, you might be interested in these articles as well:
How to fill out the Law Society of Ontario’s Form 9A: Electronic Trust Transfer Requisition
How to fill out the Law Society of Ontario’s Form 9B: Authorization of Withdrawal by Teranet
How to fill out the Law Society of Ontario’s Form 9C: Electronic Trust Transfer Requisition for Closing Funds
Investment Authority for Mortgages and Charges (Section 24):
Section 24 of By-Law 9 mandates that lawyers obtain a completed Form 9D as an investment authority before advancing money for a mortgage or charge on real property. This ensures that the investment is legitimate and authorized, preventing unauthorized use of trust funds.
Auditing and Compliance:
The LSO periodically audits law firms to ensure compliance with By-Law 9. Form 9D is a crucial document during these audits, as it provides evidence of proper authorization and handling of investments in mortgages or charges on real property. TrustReq makes it easy to collaborate with auditors by using the “invite an auditor” feature.
Exceptions
There are exceptions to the requirement to use the Form 9D. Here’s a breakdown of when lawyers do not need to prepare these documents:Institutional Lenders: If the lender is a recognized financial institution or similar entity, certain documents are not required. Specifically:
(a) The lender must be a bank (listed in Schedule I or II to the Bank Act, Canada), a licensed insurer, a registered loan or trust corporation, a subsidiary of any of these entities, a pension fund, or any business that lends money as part of its regular operations.
(b) The lender has signed a loan agreement with the borrower and provided a written commitment outlining the terms of the loan.
(c) The lender has given the lawyer a copy of this written commitment before any money is advanced to the borrower.Non-Arm’s Length Transactions: If the lender and the borrower have a close relationship (i.e., they are not dealing at arm’s length), the usual document requirements are waived.Employer-Employee Relationships: If the borrower is an employee of the lender or a related corporate entity, there is no need for the Investment Authority or Report.Disclosure Statements: If the lender has executed an Investor/Lender Disclosure Statement for Brokered Transactions (approved under the Mortgage Brokerages, Lenders and Administrators Act, 2006) and has provided written instructions for the lawyer to accept this disclosure statement as proof of the loan agreement, the additional documents are not needed.Small Loan Amounts: When the total loan amount does not exceed $6,000, the requirement to prepare an Investment Authority and Report is waived.Property Sales by Lender: If the lender is selling real property to the borrower and the loan is part of the purchase price, the usual documentation requirements do not apply.These exceptions aim to streamline the process for specific types of transactions where the risks and complexities are reduced, or where other safeguards are in place. Understanding these exceptions helps lawyers efficiently manage their record-keeping responsibilities while ensuring compliance with regulatory requirements.
Simplifying the Process
Conclusion
This form is a vital tool for Ontario lawyers in managing their trust accounts and investments in compliance with By-Law 9. It ensures that all investments in mortgages or charges on real property are properly authorized and documented, thereby maintaining the integrity of the financial management process. By understanding and correctly utilizing Form 9D, lawyers can safeguard their practice against potential issues and uphold the trust placed in them by their clients.
For any Ontario lawyer or legal professional, being well-versed in the requirements and procedures outlined in By-Law 9, including the proper use of this form, is essential for maintaining compliance and providing the highest standard of service to their clients.
