The Law Society of Ontario (LSO), previously the Law Society of Upper Canada (LSUC), has issued a public warning notice to alert lawyers to potential pitfalls when acting for clients on syndicated mortgage investments.
It defines a syndicated mortgage as: “A mortgage where two or more persons participate as investors. Syndicated mortgages can be as simple as two people lending to a third person, the loan secured against a single-family home, or as complex as a group of people pooling individual investments in a major development proposal known as a Syndicated Mortgage Investment (SMI).”
In the notice, dated October 24, 2017, LSO (then LSUC) advises that it had “become aware of instances in the marketplace where individuals have sustained significant financial loss by investing their savings in SMIs in which Ontario lawyers have played a role.”
It cautions that lawyers must act with integrity and in the best interest of their clients when offered an inducement by the facilitator or promoter of a syndicated mortgage to provide legal advice to investors.
For more information, read the full notice on LSO’s website: Notice to Lawyers Concerning Syndicated Mortgages.