Civil Procedure Rules of Nova Scotia  
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Part 15 - Other Kinds of Proceedings

Rule 72 - Mortgages

Scope of Rule 72
72.01 (1) This Rule establishes procedures for the remedy of foreclosure, sale and possession, and it recognizes other foreclosure remedies and the remedy of redemption.
  (2) A party may obtain foreclosure, sale, and possession, including a deficiency judgment or distribution of a surplus, in accordance with this Rule.
       
Claiming foreclosure, sale, and possession
72.02   A mortgagee may claim foreclosure, sale, and possession by filing a notice of action or application.
       
Parties
72.03 (1) The owner of the equity of redemption, including a trustee in bankruptcy or a person to whom the mortgagor conveys the equity, must be a defendant or respondent.
  (2) An executor of a deceased’s owner’s estate or an administrator of the deceased’s estate must be a defendant or respondent, or the mortgagee must make a motion for the appointment of a representative of the estate under Rule 36 - Representative Party.
  (3) A subsequent encumbrancer may become bound by an order for foreclosure, sale, and possession, in accordance with Rule 35.12, of Rule 35 - Parties.
  (4) A mortgagee may exclude from the claim a subsequent encumbrancer to whom the mortgagee has subordinated its interest, such as a subordination made to enhance the value of the mortgaged property by preserving a mutual right of way or a valuable tenancy.
  (5) The mortgagee who subordinates its interest may not join the encumbrancer as a party and the encumbrancer’s interest is not foreclosed by the sale.
  (6) The mortgagee may not name in the heading, or claim costs or a deficiency judgment against, a subsequent encumbrancer who is joined only for the purpose of foreclosing interests in the equity, unless a judge permits otherwise.
       
Consent of first mortgagee
72.04   A subsequent mortgagee who makes a motion for an order of foreclosure, sale, and possession must file the written consent of the prior mortgagee, unless a judge permits otherwise.
       
Evidence for order
72.05 (1) A motion or an application for an order for foreclosure, sale, and possession must be supported by affidavits providing all of the following evidence:
   
(a)
proof that the defendant or respondent has been notified in accordance with Rule 31 - Notice;
   
(b)
proof of the mortgage instrument;
   
(c)
a certificate of a lawyer abstracting the registered and recorded instruments affecting title to the mortgaged property starting with a warranty deed into the mortgagor or, if the conveyance to the mortgagor is not by warranty deed, the most recent deed or other conveyance to a predecessor in title of the mortgagor;
   
(d)
the evidence of the mortgagee, or an agent of the mortgagee, including that the grounds stated in the statement of claim or notice of application are true;
   
(e)
a statement of account and the evidence of the mortgagee, or agent of the mortgagee, that the statement is true;
   
(f)
a summary of the statement of account that accurately states the total of the charges and credits on the statement and shows a total that reconciles with the amount claimed.
  (2) The statement of account must establish, and show the calculation of, the amount of the mortgage debt, and it must include details of all payments made since the most recent of the following dates:
   
(a)
the date of the mortgage;
   
(b)
the date of the last renewal or assumption agreement;
   
(c)
the date of an agreement, or acknowledgement, signed by the mortgagor and any surety, settling, or acknowledging, the balance of the mortgage debt.
  (3) Notice of the proceeding must be given as provided by Rule 31 - Notice.
       
Contested application for foreclosure, sale, and possession
72.06   A judge may do any of the following on an application for an order for foreclosure, sale, and possession that a respondent contests by filing a notice of contest:
   
(a)
determine the issues in contest;
   
(b)
direct the application proceed as an application in court, set a time and date for the application to be heard, and give directions;
   
(c)
set a time and date for a motion under Rule 5.09, of Rule 5 - Application;
   
(d)
make an order converting the application to an action.
       
Default judgment or uncontested application
72.07 (1) A judge who hears a motion on default of defence or an application for an order for foreclosure, sale, and possession that is uncontested, or a motion for the order after issues in contest have been determined, may grant the order on such terms as are just.
  (2) The judge must settle the amount of the mortgage debt by taking the accounts or referring the taking of accounts to a referee.
  (3) The judge may require better proof of the mortgage debt, or refer the taking of accounts, to a person who is not a party.
  (4) The judge who refers the taking of accounts because of the applicant’s failure to provide a reliable statement of account, or a reliable summary, may order the applicant to pay the cost of the reference and not charge it to the mortgage debt.
  (5) The order for foreclosure, sale, and possession must provide for each of the following:
   
(a)
the amount settled;
   
(b)
foreclosure of the equity of redemption on sale;
   
(c)
notice to each subsequent encumbrancer in accordance with Rule 35.12, of Rule 35 - Parties and notice of the sale to each defendant or respondent;
   
(d)
terms for the advertisement of the sale, unless the sale is by agreement approved under Rule 72.08(2);
   
(e)
an approved description of the mortgaged property for insertion in the advertisement;
   
(f)
instructions for carrying out the sale;
   
(g)
execution by the sheriff, the sheriff’s nominee, or another person appointed by the court of a deed to the purchaser;
   
(h)
payment of the proceeds of the sale to cover the expenses of the sale, with the balance paid to the applicant and any surplus to the prothonotary.
  (6) The order may provide for a default deficiency judgment under Rules 72.11 to 72.13.
  (7) An order for foreclosure, sale, and possession does not preclude any of the following:
   
(a)
further accounts;
   
(b)
an award of costs, including the amount or a referral for taxation;
   
(c)
redemption before the equity of redemption is foreclosed by the sale;
   
(d)
further remedies, such as a deficiency judgment.
       
Sale
72.08 (1) An order for foreclosure, sale, and possession must provide for sale by public auction, unless a judge is satisfied on all of the following:
   
(a)
a person has made an offer to the mortgagee to purchase the property;
   
(b)
the offer is subject to the mortgagee obtaining an order that approves the sale and provides that the sale forecloses the equity of redemption in the mortgaged property;
   
(c)
the statement of claim or notice of application claims an order for sale of the mortgaged property by approved private sale and the notice and affidavit provide sufficient information by which a defendant or a respondent is able to assess whether to defend or contest the proceeding on the ground that sale should be by public auction;
   
(d)
each subsequent encumbrancer is a defendant or respondent or the offer provides for termination of the agreement if a subsequent encumbrancer who is notified in accordance with Rule 35.12, of Rule 35 - Parties, successfully defends or contests the sale.
  (2) A judge may approve the acceptance of an offer referred to in this Rule 72.08 and grant an order for foreclosure, sale, and possession based on the agreement.
  (3) The sheriff, the sheriff’s nominee, or another person appointed by a judge to conduct a sale by public auction or to complete a sale by approved agreement must do so in accordance with the terms of the order, the court’s instructions or directions, and the advertisement of a sale by auction or the terms of an approved agreement.
  (4) A mortgagee who acts on its own must retain a lawyer to supervise conduct or completion of a sale, and to assist the sheriff, nominee, or other person conducting or completing the sale.
  (5) The sheriff, nominee, or person appointed by a judge must sign and file a report of the sale.
       
Possession
72.09   A judge may grant an order further to an order for foreclosure, sale, and possession providing for the purchaser to be put in possession, such as an order for the removal of a person who does not leave the property in compliance with the order for foreclosure, sale, and possession.
       
Order confirming sale
72.10 (1) The mortgagee or a purchaser may make a motion to the prothonotary for an order confirming a sale made by public auction.
  (2) The person who makes a motion for an order confirming sale must satisfy the prothonotary that the order for foreclosure, sale, and possession, the court’s instructions, and the terms of the advertisement of sale have been complied with.
  (3) A motion for an order confirming a sale made by approved agreement may be made to a judge.
       
Deficiency judgment
72.11 (1) A statement of claim or notice of application for foreclosure, sale, and possession may include a claim against a person who is liable for the amount, if any, by which the mortgage debt exceeds the amount realized from the sale.
  (2) A mortgagee who claims a deficiency judgment may have default judgment for the deficiency against the party claimed to be liable for the mortgage debt, unless the party claimed against files a notice of defence or contest, or attends at the hearing of the application for an order for foreclosure, sale, and possession and obtains permission to contest the claim.
  (3) The effective date of the default judgment is fifteen days after the applicable of the following dates:
   
(a)
the date of a sale by public auction, if the mortgagee purchases the property;
   
(b)
the day the balance of the purchase price is paid to the sheriff or other person conducting a sale by public auction, if a person other than the mortgagee purchases the property;
   
(c)
the date of closing, if the sale is by approved agreement.
  (4) The amount of the default judgment must be assessed by a judge.
  (5) Interest is calculated in accordance with the mortgage until the effective date of judgment and in accordance with the Interest on Judgments Act afterwards.
  (6) The judgment extinguishes six months after its effective date, unless a notice of motion for an assessment of the amount of the deficiency is filed.
       
Motion for assessment of deficiency
72.12 (1) A mortgagee who seeks an assessment of a deficiency must file a notice of motion to assess the amount of the deficiency before one of the following deadlines:
   
(a)
six months after the effective date of the default judgment, if the sale is by public auction;
   
(b)
ten days after the day of the closing of a sale by approved agreement.
  (2) A mortgagee who makes a motion for a deficiency judgment against a party who has not designated an address for delivery must, unless a judge orders otherwise, give notice of the motion to the party in the same way a party is notified of a proceeding under Rule 31 - Notice, as if the notice of motion were an originating document.
  (3) The notice must be delivered no less than ten days before the day the motion is to be heard, unless a judge orders otherwise.
       
Calculation of deficiency
72.13 (1) A judge may calculate the deficiency by subtracting one of the following amounts from the outstanding principal, mortgage interest, judgment interest, reasonable charges authorized by the mortgage instrument, and costs:
   
(a)
the balance of the sale price paid to the mortgagee, if the property is sold by public auction or approved agreement to a person other than the mortgagee;
   
(b)
the amount reasonably realized on resale, if the property is sold by public auction to the mortgagee or its agent, it is resold by the mortgagee, and the resale price received by the mortgagee is both reasonable and greater than the bid;
   
(c)
the amount bid by, or on behalf of, the mortgagee, if the property is sold by public auction to the mortgagee and the resale price or the value of the property is less than the bid;
   
(d)
the value of the property, in all other circumstances.
  (2) A mortgagee who claims that an expenditure is a reasonable charge authorized by the mortgage instrument must demonstrate the claim by evidence specifically set out in an affidavit of the mortgagee, or its agent, showing all of the following:
   
(a)
the term in the instrument authorizing the expenditure to be made and charged to the mortgage debt;
   
(b)
the necessity of the expenditure for preserving or otherwise protecting the mortgaged property;
   
(c)
the reasonableness of the amount of the expenditure both in its fairness for the work done or materials supplied, and its value for protecting the property.
       
Surplus
72.14 (1) A mortgagee who is paid in full out of the proceeds of sale under an order for foreclosure, sale, and possession must, if there is a balance remaining, notify subsequent encumbrancers or other parties of the amount of the surplus fund.
  (2) A subsequent encumbrancer or other party must be notified of the surplus funds in either of the following ways, unless there is a designated address for delivery or a judge orders otherwise:
   
(a)
by sending the notice by registered mail to the last known address of the encumbrancer or party;
   
(b)
in the same way as a party is notified of a proceeding made under Rule 31 - Notice, as if the notice were an originating document.
  (3) A subsequent encumbrancer or other party may make a motion for payment of the surplus fund.
  (4) A judge may take accounts, make inquiries, tax costs, and order distribution of the surplus.
       
Other foreclosure remedies
72.15   This Rule 72 does not preclude a party from obtaining, in an action or on an application, an order foreclosing interests in the equity of redemption of property other than by foreclosure, sale, or possession, such as by another kind of sale by the court, by simple foreclosure, or by receivership to enforce a mortgage or other charge.
       
Redemption
72.16 (1) A mortgagor or the other person entitled to redeem mortgaged property may claim a redemption order by starting an action or application, or by making the claim in an action or application brought to foreclose the equity.
  (2) A judge who determines a claim for redemption may take accounts, make inquiries, tax costs, settle the amount of the mortgage debt, order conveyances, and direct a party to take any necessary step to give effect to a conveyance.
       

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