Modernizing Canada's secured transactions law : Bank Act security provisions

In the event of a default by the borrower, the lender has the right to enforce its security interest by seizing and selling the collateral. [...] This expansion was largely the result of the lobbying efforts of members of those sectors who wished to use their assets as collateral to secure bank loans.2 The Evolution of Canadian Secured Transactions Law 5 In 1923, the Bank Act provided for the creation of a registry system to alert third parties that a bank had taken a security interest in the borrower’s property. [...] There is a transfer of legal title to the bank, but the debtor also retains a proprietary interest in the collateral in the form of a right of redemption. [...] There is uncertainty over the application of the provincial or territorial statutes to the bank’s claim to the proceeds and uncertainty about the priority rules that would govern the outcome of a dispute between the bank’s proceeds claim and a secured party who has a provincial or territorial security interest in the same collateral.13 A different set of problems arise and a different analysis mus [...] The Saskatchewan legislation provides that a security interest in collateral is void to the extent that it secures payment or performance of an obligation that is also secured by a Bank Act security.17 The use of overlapping security agreements therefore results in the non-application of the Personal Property Security Act (PPSA) for any collateral on which a bank holds Bank Act security.