Floating Deed Of Trust for Canada

Floating Deed Of Trust Template for Canada

A Canadian Floating Deed of Trust is a sophisticated security instrument that creates a floating charge over a grantor's assets in favor of a trustee for the benefit of lenders. This document, governed by Canadian federal and provincial laws, allows businesses to secure their borrowings while maintaining operational flexibility to deal with their assets in the ordinary course of business. The security "floats" over the charged assets until a crystallization event occurs, at which point it converts to a fixed charge. The document incorporates specific Canadian legal requirements, including compliance with provincial personal property security legislation and federal banking regulations.

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What is a Floating Deed Of Trust?

The Floating Deed of Trust is a crucial security document in Canadian commercial lending transactions, particularly suitable for businesses requiring flexible security arrangements while maintaining access to their assets for regular operations. This document type combines elements of trust law and security law to create a floating charge that automatically attaches to new assets as they enter the borrower's possession, while allowing disposition of assets in the ordinary course of business. The Floating Deed of Trust is especially valuable in scenarios involving multiple lenders or syndicated facilities, as it provides a mechanism for a trustee to hold security for the benefit of changing groups of lenders. The document must comply with both federal Canadian legislation (such as the Bank Act and Interest Act) and provincial laws governing property rights, security interests, and trust arrangements. It typically includes comprehensive provisions for the creation, perfection, and enforcement of security interests, along with detailed mechanisms for the appointment of receivers and realization upon default.

What sections should be included in a Floating Deed Of Trust?

1. Parties: Identifies the key parties: Grantor (borrower), Trustee, and Beneficiary (lender)

2. Background: Explains the context of the trust deed, including the underlying loan or credit facility

3. Definitions: Defines key terms used throughout the document, including property, secured obligations, and enforcement events

4. Grant of Security Interest: Creates and defines the floating charge over the grantor's assets

5. Nature of Floating Charge: Specifies how the floating charge operates and circumstances of crystallization

6. Secured Obligations: Details the obligations secured by the floating charge

7. Representations and Warranties: Grantor's statements regarding authority, ownership, and status of charged assets

8. Covenants: Grantor's ongoing obligations regarding the charged assets and business operations

9. Events of Default: Circumstances that trigger enforcement rights

10. Enforcement Rights: Powers and remedies available upon default

11. Trustee Powers and Duties: Specifies the trustee's role, responsibilities, and powers

12. Protection of Third Parties: Provisions protecting persons dealing with the trustee

13. Governing Law and Jurisdiction: Specifies applicable law and courts

What sections are optional to include in a Floating Deed Of Trust?

1. Priority Arrangements: Required when there are multiple secured creditors to establish ranking of security interests

2. Environmental Matters: Important when charged assets include real property with potential environmental issues

3. Insurance Requirements: Detailed insurance obligations when specific coverage is required for charged assets

4. Tax Provisions: Special tax considerations or requirements for the security arrangement

5. Further Assurance: Additional requirements for perfecting or maintaining the security

6. Assignment and Transfer: Rules for transferring rights under the deed, if permitted

7. Receivership Provisions: Detailed provisions for appointment and powers of receivers when required

What schedules should be included in a Floating Deed Of Trust?

1. Property Description Schedule: Detailed description of real property and fixed assets subject to the charge

2. Excluded Assets Schedule: List of assets specifically excluded from the floating charge

3. Permitted Encumbrances: List of pre-existing or permitted liens and encumbrances

4. Form of Notice of Crystallization: Template for notice converting floating charge to fixed charge

5. Securities and Investments: Schedule of specific securities or investments covered by the charge

6. Contractual Rights: List of material contracts subject to the security interest

7. Registration Particulars: Details required for registration in relevant jurisdictions

Authors

Alex Denne

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

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Trust Deed

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking and Financial Services

Real Estate

Manufacturing

Mining and Natural Resources

Agriculture

Retail

Wholesale and Distribution

Technology

Infrastructure

Energy

Transportation and Logistics

Healthcare

Construction

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretariat

Credit Administration

Security Administration

Trust Services

Document Management

Relevant Roles

Chief Financial Officer

Treasury Manager

Corporate Lawyer

Legal Counsel

Finance Director

Risk Manager

Credit Manager

Commercial Lending Officer

Trust Officer

Security Trustee

Compliance Officer

Corporate Secretary

Banking Relationship Manager

Debt Finance Manager

Asset Manager

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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