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Loan Payoff Agreement for Canada

Loan Payoff Agreement Template for Canada

A comprehensive legal document governed by Canadian law that formalizes the terms and conditions for settling and closing out an existing loan obligation. The agreement specifies the final payoff amount, payment terms, and the process for releasing the borrower from further obligations once payment is made. It includes provisions for the discharge of any security interests and ensures compliance with federal and provincial lending regulations, including the Interest Act and applicable consumer protection laws. The document provides legal certainty for both lender and borrower regarding the full satisfaction of the loan obligation.

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What is a Loan Payoff Agreement?

The Loan Payoff Agreement is a critical document used when parties wish to formally settle and terminate an existing loan obligation in Canada. This agreement is particularly important in situations where the borrower wishes to pay off a loan before its scheduled maturity date, or when parties have negotiated a settlement amount different from the original loan terms. The document must comply with Canadian federal legislation such as the Interest Act and Bank Act, as well as provincial regulations regarding secured transactions and consumer protection. A properly structured Loan Payoff Agreement includes detailed information about the original loan, the agreed payoff amount, payment mechanics, release of security interests, and mutual releases between the parties. It serves as definitive evidence of the loan's satisfaction and protects both lender and borrower from future claims or disputes regarding the loan obligation.

What sections should be included in a Loan Payoff Agreement?

1. Parties: Identifies and defines the Lender and Borrower, including full legal names and addresses

2. Background: Recitals describing the original loan agreement, outstanding balance, and parties' desire to settle the loan

3. Definitions: Defines key terms used throughout the agreement including 'Loan Agreement', 'Payoff Amount', 'Payoff Date', and 'Security Interests'

4. Payoff Amount and Terms: Specifies the agreed payoff amount, payment method, and deadline for payment

5. Release and Discharge: Details the lender's agreement to release the borrower from further obligations upon receipt of the payoff amount

6. Representations and Warranties: Statements by both parties regarding their authority to enter the agreement and the accuracy of loan information

7. General Provisions: Standard contractual provisions including governing law, entire agreement, amendments, and notices

What sections are optional to include in a Loan Payoff Agreement?

1. Security Interest Release: Required when the original loan was secured by collateral, detailing the release of security interests

2. Payment Plan: Include when the payoff involves multiple payments rather than a single lump sum

3. Multiple Lender Provisions: Required when there are multiple lenders or loan participants to be paid off

4. Tax Implications: Include when there are significant tax consequences to the payoff that need to be addressed

5. Confidentiality: Add when parties wish to keep the payoff terms confidential

6. Survival: Include when certain representations or obligations need to survive the payoff

7. Default Provisions: Required when the payoff involves installment payments and consequences of default need to be specified

What schedules should be included in a Loan Payoff Agreement?

1. Schedule A - Original Loan Documentation: Copy or summary of the original loan agreement and any amendments

2. Schedule B - Payoff Calculation: Detailed breakdown of the payoff amount including principal, interest, and any fees

3. Schedule C - Security Interests: List of all security interests to be released (if applicable)

4. Schedule D - Payment Instructions: Detailed wire transfer or payment instructions for the payoff amount

5. Appendix 1 - Release Forms: Forms to be filed for releasing any registered security interests

6. Appendix 2 - Confirmation of Authority: Documentation confirming signing authority for corporate parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions






























Clauses


























Relevant Industries

Banking & Financial Services

Real Estate

Commercial Lending

Mortgage Industry

Corporate Finance

Private Lending

Construction & Development

Small Business

Agriculture

Manufacturing

Relevant Teams

Legal

Finance

Treasury

Credit & Collections

Risk Management

Compliance

Commercial Lending

Mortgage Services

Account Management

Document Management

Relevant Roles

Chief Financial Officer

Finance Manager

Loan Officer

Credit Manager

Legal Counsel

Corporate Secretary

Treasury Manager

Accounts Manager

Risk Manager

Collections Manager

Debt Recovery Specialist

Commercial Lending Officer

Mortgage Specialist

Financial Controller

Compliance Officer

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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