The Owner Financing Promissory Note is utilized in Canadian real estate transactions where traditional bank financing is either unavailable or undesirable, and the property seller agrees to finance the purchase directly. This arrangement is particularly common in private sales, property development scenarios, or situations where buyers may not qualify for conventional mortgages. The document must comply with Canadian federal legislation, including the Interest Act and Criminal Code provisions regarding interest rates, as well as provincial real estate and security registration requirements. It typically includes detailed payment terms, security arrangements, default provisions, and remedies available to the lender. The Owner Financing Promissory Note is often accompanied by additional security documents such as a mortgage or charge on the property, ensuring the seller's interests are protected throughout the financing period.

1. Parties: Identifies the lender (property seller/note holder) and borrower (property buyer/maker of the note)

2. Background: Establishes the context of the owner financing arrangement and related property sale

3. Definitions: Defines key terms used throughout the document

4. Promise to Pay: States the principal amount, interest rate, and unconditional promise to repay

5. Payment Terms: Details the payment schedule, including amount, frequency, and due dates

6. Interest Calculation: Specifies how interest is calculated and compounded, ensuring compliance with the Interest Act

7. Security: Describes the property securing the note and reference to related security documents

8. Default and Acceleration: Defines events of default and the lender's right to accelerate payment

9. Prepayment Rights: Outlines the borrower's rights to make early payments or pay off the note

10. Representations and Warranties: Basic statements of fact and promises by the borrower

11. Notice Requirements: Specifies how and where formal notices must be delivered

12. Governing Law: Establishes that Canadian law governs the agreement and specifies the applicable province

13. Execution: Signature blocks and execution requirements