Our September 2016 issue of Fully Secured included a short article describing the statutory requirement in Ontario imposed on secured lenders to ensure debtors are provided with copies of Ontario PPSA verification statements relating to financing statements registered against them. The article also explained how the Ontario PPSA rules around this requirement differed from the rules of the other common law provinces and territories in Canada which either allow debtors to waive receipt of a financing statement or verification statement or, in the Yukon, simply do not require the delivery of a copy of such statements to a debtor in the first place.
Somewhat overshadowed by all the fanfare given to the Ontario Government’s repealing of the Bulk Sales Act, the recent coming into force of Schedule 12 to the Burden Reduction Act, 2017, has also helped to ease the administrative burden on secured lenders in Ontario with respect to the delivery of Ontario PPSA verification statements to debtors. The Act now brings Ontario PPSA rules in line with personal property security rules in the majority of other provinces and territories in Canada by allowing debtors to waive in writing their right to receive a copy of any Ontario PPSA verification statement relating to a financing statement or financing change statement registered against them on or after March 22, 2017, being the date on which the Act received Royal Assent.
To take advantage of the administrative relief now made available under the Act, lenders must obtain such waiver from their debtors in writing which can be most easily accomplished by simply adding waiver language to any standard form documents which grant to the lender a security interest in personal property. Because other provinces and territories have had similar legislation in place for some time, general security agreements used by a number of major national financial institutions already contain such a waiver provision. All lenders however, particularly any lenders which have historically limited their lending activity to Ontario-based debtors, are encouraged to review their general security agreement and other personal property security documents to ensure those documents contain appropriate waiver language. Notwithstanding the recent Ontario PPSA changes described above, a lender’s failure to deliver an Ontario PPSA verification statement to a debtor without having obtained its written waiver remains subject to statutory monetary penalties.