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Legal Ease
Legal Ease, Lawyer
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Experience:  Lawyer
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Can Mortgage Lenders hold your insurance money hostage

Customer Question

Can Mortgage Lenders hold your insurance money hostage if your home has been seriously damaged ? My parents were affected by the High River floods and received a cheque from their insurance provider promptly. It was made out to both of my parents and Scotiabank (as the mortage lender). Scotiabank is now telling my parents they'll release the money as they see fit. My parents moved into their existing home, unfinished basement, when they received their mortgage. My dad spent the last 10 years developing it (with his own money and time). I do not understand how Scotiabank can hold ANY claim to this money. He may decide to NEVER develop that basement again. He should be able to take that money and use it as HE sees fit...like LIVE. My parents are seniors and living on a fixed and limited budget. What can they do?


 


The basement was the only thing affected by the flood and it has been gutted.

Submitted: 1 year ago.
Category: Canada Law
Expert:  Legal Ease replied 1 year ago.
Thank you for your question.

Before I begin I want to explain a bit about how the site works.

It may be that I will find that I need to gather further information from you. As well, it's quite possible that you may feel the need to ask me additional questions for further clarification.Please do not worry that you will be charged additionally if I ask you questions or if you need to ask me questions. That is not at all how the site works.

As well, please understand that as a careful lawyer I will always give you an honest answer even if the answer is sometimes not what you were hoping for.

Finally, as we go through the process please do not feel rushed if I ask you a question. You are always free to take your time to gather more information before you post back. As well, please understand that even after you rate me the post will not lock and you could always come back for further clarification if you think of something a bit later on down the road.

But what do you they say is their reasoning?
Customer: replied 1 year ago.

I am unsure of reasoning which I believe is part of our issue...lack of information. I am guessing that as the mortgage lender (Scotiabank) has an interest in the property then they are entitled to something? I don't know that is why I am asking. My dad's reasoning is when he moved into the house, and they received the mortgage - the basement was undeveloped. The bank is saying, we'll release funds as you develop the basement.


He may never do that again, and when he DID initially develop it - it was not with the banks money/loan help. It was his own. I would like to know how long they can tie up his money? will they keep it? does he have to give an explanation in writing or something to the effect that the basement wasn't developed when he got the mortgage and therefore the house is in the condition he purchased it at? and then they'll release the money? My dad is trying to explain to the bank but they are just peons going through processes handed down by head office in Toronto. They don't know why they are going anyting...they just do it. It is difficult to get to the person who really CAN answer the questions. The long and the short of this is how can my parents get this money released from the bank? or do they have some claim to it...even though they (the bank) haven't been paying insurance premiums for the last 10 years. M dad is also in contact with the insurance provider as I believe they should be acting on his behalf.

Expert:  Legal Ease replied 1 year ago.
The bank does not have a claim to it.

Their only concern is that there is still enough equity in the house.

I suggest that your parents nip this in the bud by retaining a lawyer to send a harshly worded demand letter to the legal department of the bank essentially threatening a lawsuit.

They will release the funds at that point in time I would suspect.

Otherwise they can get a court order.

You can contact the Law Society and use their Lawyer Referral Service. You will be given the name of a lawyer and can consult with the lawyer and the first half hour will be free.

The number is:

1-800-661-1095 or
403-228-1722 in Calgary

Let me know if you need any further clarification.
Legal Ease, Lawyer
Category: Canada Law
Satisfied Customers: 86431
Experience: Lawyer
Legal Ease and 3 other Canada Law Specialists are ready to help you
Expert:  Legal Ease replied 1 year ago.
Thanks very much for the rating.

Please take the time to participate in the customer satisfaction survey as that will go into my record with the site.You will be sent an email with the survey in a couple of days.

And feel free to keep my name in case you need me again down the road. You can always put my name into the subject line the next time you post so that your question will stand out for me and I will answer it just as soon as I can.

Thanks and take good care!

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