Are you about to sign a private mortgage with a private lender to make a real estate flip, finance a commercial property or start a real estate project?
If this is your first time doing business with this private lender, here are some recommended checks that you do:
- Check the legal existence of your private lender
- Check the judicial register of your private lender
- Check the online reputation of your private lender
- Check that your lender is lending money and is not just collecting administrative fees
Check the legal existence of your private lender
Although a private lender can do business under his own name without being registered with the Quebec Business Register (REQ), it is important to verify the legal existence of the company that will grant you a private loan. The REQ will also provide you with information on the directors of the company.
Check the judicial register of your private lender
The judicial register makes it possible to verify whether a company or a person has already been the subject of a lawsuit or a dispute. The judicial register is accessible from the courthouses as well as on the website of the Société québécoise d’Information juridique (Soquij).
Check the online reputation of your private lender
You can learn a lot about the private lender by doing search engine searches for the name of a private lender. Check out Google reviews, social media, and search engine results.
Check that your lender is lending money and is not just collecting administrative fees
Private lenders charge a file review fee. This is quite normal, as they must analyze your request before lending you any money. In many cases, these fees will be added to your loan. There are, however, private lenders who only live off these filing fees. They hardly ever lend money. To avoid running into this kind of lender, ask for the addresses of the last 4 real estate transactions financed. You can check this information at the Land Registry of Quebec.
Author: Guillaume
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