I. Introduction
In my May 2025 article, "The Shifting Landscape of Mortgage Enforcement: A Power of Sale Perspective in Ontario,"[1] I examined the uptick in power of sale proceedings and the mortgagee's duty to act providently when realizing on its security. In my follow-up piece, "Stepping into the Lender's Shoes: A Guarantor's Rights Under Section 2 of the Mercantile Law Amendment Act,"[2] I explored how a paying guarantor can enforce when a borrower turns uncooperative. Those articles highlighted how rising defaults, fractured family finances and competing property interests have complicated mortgage enforcement in Ontario. This third article turns to a related procedural hurdle: the effect of Certificates of Pending Litigation on power of sale transactions.
Consider a scenario that has begun to surface in our practice: a mortgagee follows every step required by the Mortgages Act — provides proper notice, waits out the redemption period, obtains default judgment, and signs an Agreement of Purchase and Sale with a third party, promising clear title on closing. Then, the purchaser’s lawyer discovers a Certificate of Pending Litigation (“CPL”) registered on title by a third party in litigation to which the mortgagee is not a party. The mortgagee first asks the land registry office to delete the registered instrument, but the registrar declines in the absence of consent or a court order. The mortgagee then seeks relief from the court, only to be met with a first‑instance decision that the court lacks jurisdiction to assist.
This is the situation addressed by the Ontario Court of Appeal in MCAN Home Mortgage Corporation v. Broad.[3] The decision is significant for mortgagees and their counsel because it highlights a practical gap in Ontario's mortgage enforcement regime.
II. Background: The CPL and the Power of Sale
A CPL is a court-issued notice registered on title to a property that provides public warning of ongoing litigation and signals that the court may have occasion to affect the property's ownership or title. Under Section 103 of the Courts of Justice Act (the "CJA")[4] and Rule 42 of the Rules of Civil Procedure,[5] a CPL may be registered where a claim is made in a proceeding for an "interest in land." Once on the register, its practical effect prohibits dealings with the property because lenders won't advance funds on it, purchasers won't close on it, and title insurers will scrutinize it carefully.
The power of sale, as reviewed in my May 2025 article, is the primary enforcement remedy available to Ontario mortgagees under Parts II, III, and IV of the Mortgages Act.[6] The enforcement path is well known: default, notice of sale, redemption period, possession, and sale to a third party with any surplus proceeds returned to the mortgagor after discharge of the debt. The legislation at the heart of this discussion is found in Sections 35 and 36 of the Mortgages Act, which protect bona fide purchasers from the consequences of irregularities in the mortgagee's enforcement process. Section 35 provides that a purchaser is not required to inquire into the propriety of the mortgagee's actions, provided certain statutory declarations are obtained. The effect is that such a purchaser receives good title notwithstanding any procedural missteps by the selling mortgagee.
But good title in law and a clean register are not the same thing. The space between a purchaser's legal right to good title and the land registrar's actual administrative practice regarding the removal of entries like CPLs is the gap that MCAN v. Broad confronts.
III. The Decision: MCAN Home Mortgage Corporation v. Broad, 2026 ONCA 217
- The Facts
The appellant, MCAN Home Mortgage Corporation, held a first mortgage for $410,000, registered May 15, 2022, against a residential property in London, Ontario registered in the name of SN under the Land Titles Act (the "LTA").
MLB was SN's common law spouse both when the property was purchased and when the mortgage was registered. She held no registered interest in the property. In May 2023, the couple separated and SN ceased making mortgage payments. MLB subsequently commenced litigation against SN claiming an equitable interest in the home on the basis of her significant financial contributions to the property. No claims were made against MCAN in that litigation. In August 2023, MLB obtained leave to register a CPL against title in connection with her lawsuit against SN.
In October 2023, with SN's default now firmly established, MCAN served a Notice of Sale on both SN and MLB. MLB's attempts to negotiate a cure of the default were unsuccessful. MCAN obtained default judgment against SN for the outstanding mortgage amount and possession of the property, and entered into an Agreement of Purchase and Sale with a third party purchaser. With the CPL still on the register, MCAN brought an application to discharge the CPL so that it could transfer good title to the third party purchaser.
- The Application Judge's Decision
The application judge dismissed MCAN's application. She held that the court had no jurisdiction to discharge a CPL at the instance of a mortgagee completing a power of sale. Relying on Royal Canadian Mortgage Investment Corp. v. Mendes,[7] the application judge reasoned that Sections 35 and 36 of the Mortgages Act are sufficient to give a purchaser good title regardless of the CPL remaining on the register, provided the mortgagee has complied with the Act's notice requirements. On this analysis, the court's discretionary power under Section 103(6)(c) of the CJA was not available to a mortgagee who was a non-party to the underlying litigation.
- The Court of Appeal's Analysis
The Court of Appeal disagreed and allowed the appeal. The court’s analysis began with a close reading of Section 103(6)(c) of the CJA, which provides that a court "may make an order discharging a certificate" where it is "just" to do so. The court found nothing in the text of this provision that confines it to parties to the underlying lawsuit. A mortgagee whose interest ranks in priority to the interest being litigated is plainly "affected" by a CPL where that CPL prevents the mortgagee from completing a power of sale. Where no reasonable claim is being advanced against the mortgagee's own interest in the land, the CPL's impact has exceeded its legitimate purpose, and the mortgagee is entitled to ask a court to exercise its discretion to order discharge.
The court then turned to the crux of the case: the relationship between Sections 35 and 36 of the Mortgages Act and the state of the parcel register. It affirmed the correctness of Mendes, that a purchaser under a properly conducted power of sale receives good title even with a CPL on the register. But the court made clear that this legal result does not cure the register itself. The LTA contemplates a register that functions as a "perfect mirror" of title. The land registrar's established practice is to refuse to delete a CPL without either the CPL holder's consent or a court order. The Mortgages Act is silent on this operational reality and imposes no obligation on the registrar to remove such entries.
In the result, the Court of Appeal set aside the application judge's order and confirmed the existence of the court's discretion to discharge a CPL at the request of a non-party mortgagee exercising a power of sale. However, the facts had materially changed since the original application hearing. The prospective sale had fallen through, MLB had succeeded in her lawsuit to become the beneficial owner of the property, and a related Superior Court application concerning her right of redemption was already underway. The Court did not itself order discharge. It remitted the matter to the Superior Court for reconsideration in light of the changed facts.
The Court also observed, in practical terms that will matter for future applications, that when granting discharge a court may impose appropriate conditions such as requiring that surplus sale proceeds be paid into court for the benefit of the person who obtained the CPL, depending on the circumstances of the case.
IV. The Legislative Gap: When "Good Title" Is Not Good Enough
The most significant contribution of MCAN v. Broad is the Court of Appeal's identification of the gap in the current legislative framework.
Sections 35 and 36 of the Mortgages Act are a foundational feature of Ontario's power of sale regime. As reviewed in my May 2025 article, these provisions insulate bona fide purchasers from the consequences of procedural defects in the enforcement process. The Section 35 statutory declaration has long been the practical instrument by which mortgagees confirm proper notice and convey confidence in title. The assumption embedded in that framework has always been that a properly conducted power of sale will ultimately produce a clean register.
MCAN v. Broad dispels that assumption. The Mortgages Act nowhere compels the land registrar to delete a CPL from the parcel register upon completion of a power of sale. The registrar's standing practice is that CPLs are removed only with the CPL holder's consent or a court order. Without one or the other, the register may continue to display the CPL even though, in law, the purchaser holds title unencumbered by it. A title insurance policy can bridge the practical gap at closing in some circumstances, but it cannot make the register accurate; it can only insure around the inaccuracy. A register that does not reflect the true state of title creates downstream uncertainty for subsequent financing and dealings with the property, none of which a title policy is designed to permanently remedy.
Ironically, Sections 35 and 36 intend to protect purchasers and promote certainty in power of sale transactions. But by providing a result that the land registry system does not automatically implement in fact, the statute inadvertently creates the very uncertainty it was meant to prevent. The Court of Appeal's solution is a workable remedy, but it is a judicial workaround for a legislative omission. Addressing this operational gap will ultimately require legislative amendments to the Mortgages Act or the LTA to mandate the removal of CPLs once a power of sale is properly completed and evidenced.
Until such an amendment materializes, the practical work of navigating this gap falls onto the lawyers. MCAN v. Broad will not be the last time a CPL blocks a mortgagee's power of sale. The fact pattern that produced this case will remain a feature of Ontario's current real estate environment.
V. Conclusion
MCAN Home Mortgage Corporation v. Broad is a welcome and necessary clarification of the court's discretion to discharge a CPL at the request of a non-party mortgagee. The Mortgages Act's safe harbour provisions are not self-executing in the land registry system. A properly conducted power of sale produces good title in law; it does not automatically produce a clean register in fact. Until the legislature addresses this operational gap, counsel must proactively manage the disconnect between lawfully acquired title and the parcel register. This means pulling the register early in the enforcement process rather than waiting until a sale is pending. If a CPL appears, counsel should promptly prepare an application for its discharge and be ready to propose pragmatic terms, such as paying surplus sale proceeds into court, to satisfy the court's conditions and keep the transaction on track.
[1] The Shifting Landscape of Mortgage Enforcement: A Power of Sale Perspective in Ontario.
[2] Stepping into the Lender's Shoes: A Guarantor's Rights Under Section 2 of the Mercantile Law Amendment Act.
[3] MCAN Home Mortgage Corporation v. Broad, 2026 ONCA 217.
[4] Courts of Justice Act, R.S.O. 1990, c. C.43.
[5] Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[6] Mortgages Act, R.S.O. 1990, c. M.40.
[7] Royal Canadian Mortgage Investment Corp. v. Mendes, 2019 ONSC 6039.
