Loan Purchase And Sale Agreement for Canada

Loan Purchase And Sale Agreement Template for Canada

This agreement governs the purchase and sale of loan portfolios in Canada, structured to comply with federal and provincial regulations including the Bank Act and applicable Provincial Personal Property Security Acts. The document outlines the terms and conditions for transferring loan assets, including purchase price, representations and warranties, transfer mechanics, and ongoing obligations of both parties. It addresses crucial aspects such as regulatory compliance, privacy considerations, and servicing arrangements, while incorporating specific Canadian legal requirements for loan assignments and security interest transfers.

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What is a Loan Purchase And Sale Agreement?

A Loan Purchase And Sale Agreement is a crucial document used in Canadian financial markets when one entity wishes to sell all or part of its loan portfolio to another entity. This agreement is commonly used in scenarios including portfolio optimization, regulatory capital management, or strategic exits from certain lending markets. The document must comply with Canadian federal banking regulations and provincial security and consumer protection laws. It typically includes detailed provisions for the transfer of loan documentation, security interests, and servicing rights, along with representations and warranties about the loan portfolio's quality and compliance status. The agreement is particularly important in the context of Canadian financial institutions' regulatory requirements and must address specific Canadian law considerations regarding assignment of debt obligations and privacy law compliance.

What sections should be included in a Loan Purchase And Sale Agreement?

1. Parties: Identification of the seller and purchaser of the loans

2. Background: Context of the transaction and brief description of the loan portfolio being sold

3. Definitions: Defined terms used throughout the agreement

4. Purchase and Sale: Core transaction terms including purchase price, payment terms, and what is being sold

5. Transfer of Rights: Provisions regarding the assignment and transfer of loan rights and related security

6. Purchase Price and Payment: Detailed terms of consideration, including any adjustments and payment mechanics

7. Closing: Closing conditions, timing, and mechanics for completing the transaction

8. Seller's Representations and Warranties: Representations about the seller's authority, loan portfolio quality, and compliance with laws

9. Purchaser's Representations and Warranties: Representations about the purchaser's authority and ability to complete the transaction

10. Covenants: Ongoing obligations of both parties before and after closing

11. Indemnification: Terms for compensating parties for breaches or losses

12. Survival: Which provisions continue after closing and for how long

13. Notices: How formal communications between parties should be made

14. General Provisions: Standard boilerplate provisions including governing law, amendments, and assignment

What sections are optional to include in a Loan Purchase And Sale Agreement?

1. Servicing Transition: Used when loan servicing responsibilities need to be transferred or maintained

2. Post-Closing Adjustments: Include when purchase price adjustments may be needed after closing

3. Security Interest: Required when additional security arrangements are needed for the transaction

4. Regulatory Compliance: Detailed section needed for heavily regulated loan portfolios

5. Third Party Consents: Include when transfers require approvals from other parties

6. Data Protection: Detailed provisions needed when significant personal data is involved

7. Foreign Exchange Provisions: Include for loans in multiple currencies

8. Interim Servicing: Used when seller continues servicing loans for a transition period

What schedules should be included in a Loan Purchase And Sale Agreement?

1. Schedule A - Loan Schedule: Detailed list of loans being sold including key terms, amounts, and borrower information

2. Schedule B - Loan Documents: List of all documentation being transferred for each loan

3. Schedule C - Form of Transfer Documents: Templates for assignment and transfer documentation

4. Schedule D - Closing Checklist: List of all deliverables required at closing

5. Schedule E - Purchase Price Calculation: Detailed breakdown of purchase price and any adjustments

6. Schedule F - Excluded Assets: List of any assets or rights explicitly excluded from the sale

7. Appendix 1 - Due Diligence Findings: Summary of due diligence results and any identified issues

8. Appendix 2 - Servicing Transfer Procedures: Detailed procedures for transferring loan servicing responsibilities

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

Finance Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Financial Services

Investment Management

Private Equity

Asset Management

Debt Collection

Commercial Lending

Consumer Finance

Credit Services

Financial Technology

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit Administration

Portfolio Management

Operations

Due Diligence

Corporate Development

Investment

Commercial Banking

Relevant Roles

Chief Financial Officer

Portfolio Manager

Credit Risk Manager

Legal Counsel

Compliance Officer

Treasury Manager

Investment Director

Loan Operations Manager

Due Diligence Officer

Asset Manager

Transaction Manager

Commercial Banking Officer

Corporate Finance Director

Finance Director

Risk Management Officer

Industries
Bank Act (Federal): Primary federal legislation governing banking operations and financial services in Canada, relevant for loan transfers involving regulated financial institutions
Personal Property Security Act (Provincial): Governs secured transactions and the registration of security interests in personal property, including the assignment of loans and security interests
Personal Information Protection and Electronic Documents Act (PIPEDA): Federal privacy law governing the collection, use, and disclosure of personal information in commercial transactions, including loan transfers
Proceeds of Crime (Money Laundering) and Terrorist Financing Act: Federal legislation requiring due diligence and reporting requirements in financial transactions to prevent money laundering
Interest Act (Federal): Regulates interest rates and their disclosure in loan agreements, affecting the terms that can be included in loan transfers
Provincial Consumer Protection Acts: Provincial legislation protecting consumer rights in financial transactions, particularly relevant if any loans being transferred are consumer loans
Bankruptcy and Insolvency Act: Federal legislation affecting creditor rights and the treatment of loan assignments in bankruptcy scenarios
Bills of Exchange Act: Federal legislation governing negotiable instruments and potentially relevant for the transfer of certain types of loan documentation
Provincial Electronic Commerce Acts: Governs electronic signatures and records in commercial transactions, relevant for digital execution and record-keeping
Provincial Limitations Acts: Sets time limits for enforcement of contractual rights and obligations related to loan agreements
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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