Undertaking

What is it?

Undertaking is a guarantee given by a borrower to First National to complete mandatory repairs on the property by a certain date.

However, an undertaking is not exclusive to mandatory repairs. It may also include rental achievement, zoning, work orders, fire department inspections, property management, property tax confirmations, BCA Report, Asbestos Survey and property being leased.

Canadian Mortgage Housing Corporation (CMHC)

If the loan is CMHC insured, the mandatory repairs are outlined in Schedule B of the CMHC Certificate of Insurance (COI) Conditions.

Conventional

If the Loan is Conventional, the mandatory repairs are outlined in the Phase 1 Environmental Report or the Building Condition Report.

Why is it important?

The undertaking helps to ensure that:

The property is being maintained to high standard
The property is being properly managed
Health and Safety repairs are completed to municipal standards
No liens are registered on title as a result of non- payment of property taxes or violation of work orders

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Financial requirements

On an annual basis, we review financial documents as outlined in the commitment letter to continuously verify the financial health of the property.

Insurance requirements

On an annual basis, we verify that all insurance requirements outlined in the original loan documents are being met to ensure adequate coverage for the property.

Property tax

For borrowers that choose to pay their own property taxes, we work in collaboration with the tax department to show proof of timely and accurate payment.

Payments, pre-payments and banking changes

If alterations to verified payment dates or banking information need to be made, we work to verify and implement those changes, so information remains current and execution proceeds smoothly.

Mortgage information

For both annual accounting and general mortgage management, we provide three key statements including the Annual Statement, Mortgage Information Statement and Amortization Schedule.

Your commitment letter

The commitment is a contract between First National and the Borrower. First National uses this commitment as the source for all decision making throughout the duration of the mortgage amortization period. The commitment covers everything from payment type (fixed, floating, amortizing, interest only), pre-payment parameters, insurance requirements, type of annual review documents to be collected, undertaking requirements, etc.

Why is it important?

It is important to note that the commitment is attached to the mortgage (rather than the borrower) for the entire amortization period.

If the loan is assumed the current Borrower is replaced by the Purchaser of the property.
If the loan is renewed the terms and conditions of the commitment are extended for a new term in accordance with the renewal agreement.
If the loan is refinanced the terms of the existing commitment is discharged and new terms are registered with the mortgage.