Mortgage Discharge and Cancellation Fees in Quebec

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Mortgage Discharge and Cancellation Fees in Quebec

Mortgage refinancing necessarily involves closing the existing mortgage and opening a new one. For the new lender to register their mortgage in first rank at Quebec's land registry, the former mortgage must first be cancelled. This discharge and cancellation process generates fees that every borrower should anticipate before committing to a refinancing.

Quebec's Land Registry and Publication of Rights

In Quebec, the system of publication of real rights in immovables is governed by the Civil Code of Quebec (articles 2934 to 2940). Any mortgage granted on an immovable must be published at the land registry to be enforceable against third parties. The land registry is maintained by the Bureau de la publicite des droits under the Quebec Ministry of Justice. Registering a mortgage gives it a rank, and this rank determines payment priority in case of default. When refinancing, the new lender requires first rank, which necessitates cancellation of the previous mortgage.

Components of Discharge Fees

Notary fees: between $150 and $350 for preparing the release deed (quittance/mainlevee). The notary verifies the loan balance, obtains the discharge from the lender, and drafts the cancellation deed for publication.
Publication fees: approximately $87 per formality at Quebec's land registry. This rate is set by regulation and applies to publishing the cancellation deed.
Outgoing lender administrative fees: between $0 and $250 depending on the institution. Some banks charge processing fees to prepare discharge documents. Monoline lenders generally charge less.
Possible additional fees: if the mortgage is collateral (common at TD, Desjardins), the discharge may require additional steps and higher fees, as the collateral charge often covers other financial products.

Cancellation Process at the Land Registry

Balance statement request: The refinancing notary requests a balance statement from the outgoing lender showing the exact amount to be repaid, including accrued interest and the break penalty.
Obtaining the release: Once the balance is repaid, the outgoing lender issues a release (quittance/mainlevee) authorizing the mortgage cancellation. Timelines vary from 5 to 30 days depending on the lender.
Preparing the cancellation deed: The notary prepares the cancellation deed in accordance with Civil Code of Quebec requirements and presents it to the Bureau de la publicite des droits.
Publication at the land registry: The cancellation deed is published at Quebec's land registry, officially erasing the mortgage. Processing time is 5 to 15 business days.
Cancellation confirmation: The notary obtains confirmation that the cancellation has been completed and notifies all parties. The immovable index is updated accordingly.

Strategies to Minimize Discharge Fees

Several options can reduce or eliminate discharge fees. Subrogation, when available, allows the new lender to take the rank of the former lender without requiring a cancellation. This option is only possible for conventional mortgages, however. When renewing with the same lender, no discharge is needed. Finally, some lenders agree to reimburse discharge fees as part of their refinancing offer, especially in a competitive market. Your AMF-certified mortgage broker can help identify lenders offering these advantages and include these fees in your refinancing cost-benefit analysis.

Frequently Asked Questions

What exactly is a mortgage discharge?

A mortgage discharge is the process by which the current lender agrees to remove their mortgage from Quebec's land registry. The notary prepares a release deed (quittance/mainlevee) which is then published at the land registry to formalize the cancellation. It is mandatory before registering the new lender's mortgage.

How much do discharge fees cost in Quebec?

Total fees generally range from $250 to $600. This includes notary fees ($150 to $350), land registry publication fees (approximately $87 per formality), and the outgoing lender's administrative fees ($0 to $250 depending on the institution). Collateral mortgages generally cost more to discharge.

What is the difference between discharge and cancellation?

The discharge is the lender's consent to release the property from the mortgage. The cancellation is the official registration at the land registry that erases the mortgage. In practice, the notary obtains the discharge from the lender and proceeds with the cancellation at the land registry. The two terms are often used interchangeably.

Can I avoid discharge fees?

If you transfer your mortgage to the same lender (renewal or blend-and-extend), no discharge is needed. Additionally, if the new lender agrees to subrogate (take the place of the former lender on the existing mortgage), discharge fees can be avoided. However, subrogation is not possible with a collateral mortgage.

How long does the cancellation at the land registry take?

Publishing the cancellation at Quebec's land registry generally takes 5 to 15 business days after filing by the notary. Processing time can vary depending on the specific registry office. The notary confirms the cancellation once it is effective.

Who pays the discharge fees during refinancing?

The borrower is generally responsible for all discharge fees, including notary fees and publication fees. Some lenders occasionally offer to cover part of these fees as part of refinancing promotions, but this is not the norm. Your AMF-certified mortgage broker can negotiate these terms.