Personal Property and Security

GENERAL OVERVIEW

Personal property includes vehicles, computers, furnishings, and jewellery. Personal property is different from immoveable real property such as land, a house, condominium, or building.

When purchased, personal property may not be fully paid for. The seller of that property may allow credit (payment over time) or may require full payment and the buyer must seek a loan to make the purchase (and pay in full).

The person allowing credit or making a loan will normally want security for making the “loan” – something more that a mere promise to pay back the money “loaned out”. In other words, the person making the loan will want the “right” to “seize and sell” the personal property the debtor purchased to help pay down the amount that was lent out once the debtor defaults on the payment plan.

Conditional sales agreement, chattel mortgage, floating charge and a general security agreement (GSA) are common forms of personal property security agreements signed by debtors.

When a debtor has no more security available to provide a creditor, but the debtor needs a loan to purchase a specific item (chattel), a creditor may be available to finance that specific purchase provided they are able to get a “purchase money security interest” (PMSI) in the newly purchased. The PMSI as it relates to the specific purchased item has priority over other security.

Recent Relevant Caselaw

Bogue v Miracle, 2022 ONCA 672 (CanLII) revisits some key principles:

(1) The Indian Act establishes that the real and personal property of an Indigenous person or a band on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress, or execution in favour of any person other than an Indigenous person or a band.

(2) This protection represents an obligation to Indigenous peoples which the Crown has, namely, that it is honour-bound to shield them from any efforts by non-natives to dispossess Indigenous peoples of their land base and the chattels on that land base: Mitchell v. Peguis Indian Band, [1990] 2 SCR 85.

Copyright 2022

Nothing on this website is legal advice

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