Payment of notary fees associated with the making of a loan secured by immovable hypothec Mortgage brokerage
References to a “firm” on this page include an independent representative and independent partnership.
The AMF is aware of a widely used practice in the mortgage brokerage industry that consists in offering clients the payment (or reimbursement) of some or all of their notary fees in connection with the making of a mortgage loan.
The payment of notary fees is not specifically prohibited by the Act respecting the distribution of financial products a This link will open in a new windownd services (the “Distribution Act”) and its regulations. However, mortgage brokers and firms must exercise caution when offering to pay clients’ notary fees and comply with the obligations set out in the Distribution Act and its regulations.
A firm is responsible for ensuring that its practices and those of its mortgage brokers are compliant. It should therefore not adopt practices in connection with the payment of notary fees that are likely to influence the performance of its obligations or a mortgage broker’s obligations to the detriment of the client. It must ensure compliance with the Distribution Act and its regulations.
Mortgage brokers must comply with ethical obligations. In particular, they must avoid placing themselves in a conflict of interest and act with independence in respect of their clients and in their clients’ best interests. They must therefore subordinate their personal interests and the interests of any other person or company to their clients’ interests.
For example, a mortgage broker may not offer to pay or reimburse a client’s notary fees on the condition that the client agrees to enter into a mortgage agreement with a specific financial institution because, for example, the broker would receive a more substantial commission or an incentive.
Likewise, mortgage brokers must ensure that the loan they propose is suited to the client’s situation and needs and must appropriately advise the client.
For example, offering to pay the client’s notary fees must not have the effect of inducing the client to enter into a loan that would be unsuitable
Furthermore, mortgage brokers may not exert undue pressure on a client or use fraudulent tactics to induce a client to purchase a financial product or service. They may not, in any manner whatsoever, exert pressure to convince a client to do or continue to do business with them. Offering to pay the notary fees must not be used as an argument of last resort.
For example, a mortgage broker who offers to pay a hesitant client’s notary fees must ensure when proposing to do so that he or she is not exerting undue pressure on the client.
The AMF considers it a good practice for firms to establish clear, consistent and objective rules concerning the payment of notary fees.
The AMF also encourages firms to document their practices regarding the payment of notary fees and to retain the details of this practice, both in the record of each of the clients concerned and in the firm’s accounting registers. For example, copies of the invoice and cheque given to the client should be retained.
The AMF wants to remind representatives that one of the important aspects of its mission is to see to the protection of the public.
The AMF will not provide any legal opinions or validate the compliance of each individual situation and recommends that you seek legal counsel if you have any doubts about the legality of your practices.