Mortgaging a Disposition
- Mortgaging an agricultural disposition
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An agricultural disposition can be mortgaged by the disposition holder to obtain a loan. In doing this, the disposition holder is effectively using the disposition contract as security for repayment of the loan.
For the disposition holder to use the disposition as loan security, the Department of Alberta Sustainable Resource Development must first enter into a memorandum of agreement with the party loaning the money (the lender). Memorandums of agreement to use dispositions as security between the lender and Alberta Sustainable Resource Development can be terminated by either party upon three month's notice. The termination doesn't apply to conditional surrenders registered prior to the termination.
Once a memorandum of agreement is in place, the lender can then have a conditional surrender of lease registered in the department's records indicating the lender's interest in the land. Once the conditional surrender of lease is registered in the records, the department must contact the lender first before doing anything that might change the status of the disposition (i.e., assigning it, deleting land, cancelling the disposition, etc.). The government still maintains ultimate control of the disposition.
If a disposition holder has mortgaged the disposition and defaults on the loan, the disposition is cancelled and the lender has one year to find a replacement disposition holder. Typically, the lender advertises the availability of the disposition and disposes of it through a bid process. The money received for the bid is retained by the lender. The new disposition holder must pay a nominal application fee to Alberta Sustainable Resource Development and meet the basic application criteria before obtaining the rights to the disposition.
This information is intended for convenience of reference only. The current Public Lands Act and regulations should be consulted for all purposes of interpreting and applying the law.
For updated information
Contact any of the offices below:
Alberta Sustainable Resource Development
Lands Division
Rangeland Management Branch
South Tower, Petroleum Plaza
9920 - 108 Street NW
Edmonton, Alberta T5K 2M4
Telephone: (780) 427 3595
Land Dispositions Branch
South Tower, Petroleum Plaza
9915 108 Street NW
Edmonton, Alberta T5K 2G8
Telephone: (780) 427 3570
Forestry Division
Forest Management Branch
9920 108 Street NW
Edmonton, Alberta T5K 2M4
Telephone: (780) 422 4590
