BILL NO. 66

1st Session, 58th General Assembly
Nova Scotia
49 Elizabeth II, 2000

Government Bill

Consumer Protection Act (amended)
and Mortgage Brokers' and Lenders' Registration Act (amended)

The Honourable Angus MacIsaac
Minister of Service Nova Scotia and Municipal Relations

First Reading: October 30, 2000

(Explanatory Notes)

Second Reading: November 10, 2000

Third Reading: November 27, 2000 (NO COMMITTEE AMENDMENTS)

Clause 1

(a) revises and re-enacts the definition Section in the Consumer Protection Act;

(b) adds an application Section to the Act;

(c) provides for the appointment of the Registrar of Credit and the Deputy Registrar of Credit; and

(d) sets out the duties and powers of the Registrar of Credit.

Clause 2 provides that the Registrar of Credit or a person authorized by the Registrar may enter the premises of a broker or lessor and inspect the records and files of the broker or lessor.

Clause 3

(a) eliminates the authority for advisory councils under the Act;

(b) repeals an obsolete provision respecting discrimination;

(c) requires a person carrying on business as a lender, broker or lessor to obtain a permit from the Registrar of Credit;

(d) creates an offence where a person does not obtain a permit;

(e) permits the Registrar of Credit to suspend or cancel a permit, deny a permit or add terms and conditions to a permit; and

(f) requires the Registrar of Credit to be notified of changes in certain information contained in a permit.

Clause 4 makes a change in wording that is necessary as a result of changes made in Clause 1.

Clause 5 updates and harmonizes the disclosure requirements for credit agreements and adds disclosure requirements for consumer leases.

Clause 6 increases the penalty for a violation of the Consumer Protection Act or the regulations made pursuant to that Act from a maximum of two thousand dollars to a maximum of twenty-five thousand dollars for an individual and from a maximum of twenty-five thousand dollars to a maximum of one hundred thousand dollars for a corporation.

Clause 7 eliminates an unnecessary reference in the Consumer Protection Act to the Criminal Code (Canada).

Clause 8 amends the regulation-making authority of the Governor in Council in the Consumer Protection Act.

Clause 9

(a) revises and re-enacts the definition Section in the Mortgage Brokers' and Lenders' Registration Act; and

(b) provides for the appointment of the Registrar of Mortgage Brokers and Lenders and the Deputy Registrar of Mortgage Brokers and Lenders.

Clause 10 adds references to a mortgage lender to Section 5 of the Mortgage Brokers' and Lenders' Registration Act.

Clause 11

(a) requires a person who carries on business as a mortgage broker or lender to obtain a permit from the Registrar of Mortgage Brokers and Lenders;

(b) enables the Registrar to grant or renew a permit or to refuse to grant or renew a permit in certain circumstances; and

(c) sets out the disclosure requirements for a mortgage or the renewal of a mortgage.

Clause 12 requires the Registrar of Mortgage Brokers and Lenders to order the immediate cessation of misleading advertising.

Clauses 13 and 14 add references to mortgage lenders to Sections 15 and 16 of the Mortgage Brokers' and Lenders' Registration Act.

Clause 15 amends the regulation-making authority of the Governor in Council in the Mortgage Brokers' and Lenders' Registration Act.

Clause 16 sets out the requirement for deeming a person to be carrying on business as a mortgage lender.

Clause 17 adds a reference to a mortgage lender to Section 21 of the Mortgage Brokers' and Lenders' Registration Act.

Clause 18 provides that evidence of one transaction is prima facie evidence that a person is carrying on business as a mortgage broker or lender.

Clause 19 repeals a disclosure requirement that is now covered by the amendments made in Clause 11.

Clause 20 amends the provisions in the Mortgage Brokers' and Lenders' Registration Act dealing with the prepayment of a mortgage.

Clause 21 clarifies that failure to comply with the Mortgage Brokers' and Lenders' Registration Act does not affect the security interest of the lender.

Clause 22

(a) clarifies that a person who has been issued a permit must use the name on the permit in all promotional materials; and

(b) provides that a mortgage broker or lender shall not make any representation in writing that the person holds a permit issued pursuant to the Mortgage Brokers' and Lenders' Registration Act.

Clause 23 adds a reference to a mortgage broker or lender to Section 28 of the Mortgage Brokers' and Lenders' Registration Act.

Clause 24 increases the penalty for a violation of the Mortgage Brokers' and Lenders' Registration Act or the regulations made pursuant to that Act from a maximum of five thousand dollars to a maximum of twenty-five thousand dollars for an individual and from a maximum of twenty-five thousand dollars to a maximum of one hundred thousand dollars for a corporation.

Clause 25 provides that the Act comes into force on proclamation.

Be it enacted by the Governor and Assembly as follows:

1 Sections 2 to 4 of Chapter 92 of the Revised Statutes, 1989, the Consumer Protection Act, are repealed and the following Sections substituted:

2 In this Act,

(a) "annual percentage rate" means the total amount of interest and non-interest charges for a loan, expressed as an annual percentage rate as determined in the regulations;

(b) "borrower" means an individual who receives credit or will receive credit from another party, but does not include a guarantor;

(c) "broker" means a person who holds himself or herself out or carries on the business of providing goods or services to a borrower to assist the borrower in obtaining a loan of money from a lender;

(d) "buyer" means an individual who purchases goods or services on credit and includes the individual's agent, but does not include an individual of a class or classes to whom this Act is declared by the regulations not to apply;

(e) "cost of borrowing" means any amount that a borrower is required to pay under or as a condition of entering into a credit agreement other than

(i) a payment or repayment of any portion of the principal, or

(ii) any charges specified as being exempt from the annual percentage rate calculation;

(f) "co-signer" means a joint signer of a credit agreement;

(g) "credit" means credit for which a borrower is required to pay and that is

(i) given under an agreement between a seller and a buyer to purchase goods or services by which all or part of the purchase price is payable after the agreement is entered into, or

(ii) given by the advancement of money;

(h) "credit agreement" means an agreement under which one of the parties extends credit in any form to the other party but, except where otherwise expressly provided, does not include a lease;

(i) "credit card" means a card issued by a lender or business authorizing the holder to buy goods or services or receive cash advances on credit;

(j) "disbursement charge" means the official fees paid to a registry for the registration of a security interest;

(k) "fixed credit" means credit under a credit agreement that is not open credit;

(l) "floating rate" means an interest rate that bears a specified mathematical relationship to a public index rate;

(m) "goods" includes tokens, coupons or other documents or things issued or sold by a seller to a buyer that are exchangeable or redeemable for goods or services;

(n) "grace period" means a period for which certain finance charges that accrue during the period will be forgiven if the borrower satisfies conditions specified in the credit agreement;

(o) "guarantor" means a person who makes a commitment to pay another person's debt in case of the other person's default;

(p) "insurance" means insurance on the life or health of a borrower or buyer or on property charged to secure payment of indebtedness of a borrower or buyer to a lender or seller;

(q) "lender" means a person who, as a business or in the course of business, extends credit and includes the person's agent;

(r) "Minister" means the Minister of Service Nova Scotia and Municipal Relations;

(s) "official fees" means fees paid or payable to a public official in the Province for the filing or registration of an instrument relating to a credit transaction;

(t) "open credit" means credit made available under a credit agreement that

(i) anticipates multiple advances to be made as requested by the borrower in accordance with the agreement, and

(ii) does not define the total amount to be advanced to the borrower under the agreement although the agreement may impose a credit limit;

(u) "person" includes a partnership or sole proprietorship where the sole proprietor uses a business name other than the person's own name or uses the person's own name with the addition of some word or phrase;

(v) "public index" means a floating rate of interest that is easily ascertainable by the public and is made public at least weekly in a publication of general circulation;

(w) "Registrar" means the Registrar of Credit;

(x) "retailer" means a merchant who sells goods to a consumer;

(y) "retailer credit" means fixed credit extended to a borrower for the purchase of a product sold or manufactured by the retailer;

(z) "security interest" means an interest in property that is retained by or given to a lender for the purpose of securing the borrower's obligations under a credit agreement;

(aa) "seller" means a person who is in the business of selling goods or services to buyers and includes the person's agent, but does not include a person or class of persons to whom this Act is by the regulations declared not to apply;

(ab) "trade-in" means consideration given by a buyer in a form other than money or an obligation to pay money;

(ac) "variable rate fixed loan" means a credit agreement whereby a borrower receives a predetermined amount from the lender and the interest charged on the amount can vary under the terms of the credit agreement.

3 (1) This Act applies to credit and lease agreements other than a credit or lease agreement entered into

(a) for business or industrial purposes of a borrower or lessee;

(b) with a borrower or lessee that is not an individual;

(c) on the security of a mortgage of real property; or

(d) in respect of the sale of goods intended for resale.

(2) Any class of credit or lease agreement or class of lender, broker or lessor may be excluded by the regulations from the application of this Act.

4 (1) The Governor in Council may appoint a person to be the Registrar of Credit.

(2) The Registrar of Credit is responsible for the administration of this Act.

(3) The Governor in Council may appoint a person to be Deputy Registrar of Credit who, in the absence or incapacity of the Registrar or when the office of Registrar is vacant, shall perform the duties and may exercise all the powers of the Registrar.

4A It is the function of the Registrar and the Registrar has power to

(a) investigate complaints regarding lending, brokering or leasing and persons engaged in business as lenders, brokers or lessors;

(b) conduct studies, inquiries and surveys for the purpose of obtaining information as to who are lenders, brokers or lessors in the Province, investigate their methods and practices of carrying on business and keep informed of developments or changes in the business of lending, brokering or leasing;

(c) consult with and co-operate with lenders, brokers or lessors and other interested persons and organizations to assist in the attainment of the purpose of this Act;

(d) disseminate information respecting methods of obtaining or granting credit, brokering or leasing, the practices of lenders, brokers or lessors, the cost of borrowing, the facilities available for obtaining loans on credit and such other information as the Registrar considers desirable for the purpose of creating an informed public;

(e) ensure that credit and lease agreements and disclosure documents, including those relating to brokering, are in compliance with this Act and the regulations;

(f) approve or deny applications for permits under this Act;

(g) perform the duties and exercise the powers imposed or conferred upon the Registrar by this Act or the regulations;

(h) perform such other functions as are prescribed by the Governor in Council.

2 Section 6 of Chapter 92 is amended by adding ", broker or lessor" immediately after "lender" in the second, in the fourth and in the fifth lines.

3 Sections 9 to 15 of Chapter 92 are repealed and the following Sections substituted:

9 (1) Every person who carries on business as a lender, broker or lessor shall obtain a permit from the Registrar.

(2) A person who carries on business as a lender, broker or lessor and who does not hold a permit issued pursuant to this Act is guilty of an offence.

10 No person shall publish or cause to be published any statement of representation that the person holds a permit issued pursuant to this Act.

11 The Registrar may suspend or cancel the permit held by any person or take disciplinary action, including levying a fine,

(a) for the breach of a term of condition upon which the permit was issued;

(b) where the Registrar has reason to believe that the person has violated or failed to comply with this Act or the regulations or an order or direction given under this Act or the regulations; or

(c) where the Registrar considers it to be in the public interest to do so.

12 (1) The Registrar may issue an order or direction under this Act or the regulations to a person holding a permit issued pursuant to this Act.

(2) The Registrar may attach terms and conditions to a permit issued pursuant to this Act.

(3) Where the Registrar

(a) is not satisfied that an application meets all of the requirements of this Act or the regulations; or

(b) is of the opinion that it is not in the public interest to issue a permit,

the Registrar may refuse to grant a permit to an applicant.

(4) A person aggrieved by a decision of the Registrar made pursuant to subsection (3) may appeal to a judge of the Supreme Court of Nova Scotia.

13 (1) Where the Registrar believes that a lender, broker or lessor holding a permit is not carrying on business in the Province, the Registrar may

(a) send to the lender, broker or lessor a registered letter inquiring whether the permit holder is carrying on business in the Province and stating that if an answer to a letter is not received within one month from the date of the letter the permit of the lender, broker or lessor will be cancelled; and

(b) cancel the permit of the lender, broker or lessor if no answer is received within that time or if the lender, broker or lessor advises the Registrar that the lender, broker or lessor is not carrying on business in the Province.

(2) The Registrar may cancel the permit of any lender, broker or lessor that is a company if the Registrar is satisfied that the company has been dissolved or has been struck off the register under the Corporations Registration Act.

(3) The Registrar may cancel the permit of any lender, broker or lessor who has become bankrupt.

14 (1) Every applicant for a permit shall state in the application an address for service in the Province and all notices under this Act or the regulations required or permitted to be given to the applicant are sufficiently given or served for all purposes if delivered or sent by registered mail to the last address for service so stated.

(2) Every lender, broker or lessor holding a permit shall, within five days, notify the Registrar in writing of

(a) any change in the person's address for service;

(b) any change in the name of the permit holder or any change in the officers of the business; or

(c) any change in the partners in the case of a partnership.

4 Section 16 of Chapter 92 is amended by striking out "registered" in the first line and substituting "holding a permit".

5 Sections 17 to 21 of Chapter 92 are repealed and the following Sections substituted:

17 (1) A borrower or lessee who is required as a term of the agreement to purchase any insurance may purchase the insurance from any insurer who may lawfully provide that type of insurance, except that the lender or lessor may reserve the right to disapprove, on reasonable grounds, the level of insurance coverage selected by the borrower.

(2) A lender or lessor who offers to provide or to arrange the insurance referred to in subsection (1) shall at the same time clearly disclose to the borrower or lessee, in writing, that the borrower or lessee may purchase the required insurance from an insurer of the borrower's or lessee's choice.

18 (1) Where a disclosure to a borrower is required by this Act or the regulations to be made in a disclosure statement, the disclosure statement shall

(a) be in writing or be in a form that can reasonably be expected to provide the borrower with continuing access to the information; and

(b) express the required information clearly, concisely, in a logical order and in a manner that is likely to bring the information to the borrower's attention.

(2) The lender shall provide the initial disclosure statement as prescribed in the regulations before the borrower enters into the agreement or makes any payment, excluding disbursement charges, whichever is earlier.

(3) Changes in terms favourable to the consumer in that they reduce the cost of borrowing are permitted without prior notice.

19 (1) A disclosure statement for fixed credit shall contain the requirements prescribed by the regulations.

(2) The requirements referred to in subsection (1) apply to credit agreements for fixed credit that are renewed, amended or entered into after the coming into force of this Section.

20 (1) A disclosure statement for open credit shall contain the requirements prescribed by the regulations.

(2) The credit limit may be disclosed

(a) in the initial disclosure statement;

(b) in the first statement of account; or

(c) in a separate statement delivered to the borrower no later than when the borrower receives the first statement of account.

(3) Information about optional services and charges for those services or information that is specific to a particular transaction under the credit agreement for open credit may be provided in the initial disclosure statement or a separate statement delivered to the borrower before the services are provided or the particular transaction is entered into.

(4) All co-signers to a loan or open credit shall receive the statements and notices required by this Act and no change may be made in the amount of open credit without the prior approval of all co-signers.

(5) A guarantor has the right to request and receive information pertaining to the loan or open credit transaction.

(6) For open credit that is not associated with a credit card, the lender shall disclose any change in the interest rate in the next statement of account.

(7) With respect to credit card loans, borrowers shall receive thirty days advance notice of any interest rate change, unless the interest rate is linked to a public index as indicated in the credit agreement.

(8) Subject to subsection (10), a lender shall deliver a statement of account to the borrower at least monthly.

(9) The statement of account referred to in subsection (8) shall contain the requirements prescribed by the regulations.

(10) A lender is not required to send a statement of account to a borrower at the end of any period during which there have been no advances or payments if

(a) the outstanding balance is zero; or

(b) the borrower is in default and has been notified that the privilege to obtain advances under the agreement has been cancelled or suspended, the credit grantor has demanded payment of the outstanding balance and interest no longer continues to accrue.

(11) A lender shall provide a telephone number so that the borrower can make telephone inquiries about the borrower's account during the lender's ordinary business hours at no charge to the borrower.

(12) This Section applies after the coming into force of this Section to all credit agreements for open credit whether those agreements are entered into before or after the coming force of this Section.

21 (1) A lender issuing a credit card

(a) shall disclose in an application form for the credit card or a document accompanying the application the requirements prescribed by the regulations; and

(b) may provide a telephone number where information can be obtained, at no charge for the call, during the lender's ordinary business hours.

(2) Where a borrower applies for a credit card by telephone or other electronic means, the lender shall disclose the annual interest rate or the public index and the relationship between the public index and the annual interest rate, depending on which circumstance applies, when the borrower makes the application.

(3) When individual consumers are directly solicited, either in person, by mail or by electronic means, to apply for a credit card, the interest and other fees in effect at the time of solicitation shall be disclosed at that time.

(4) Where a credit card holder is required by the credit agreement to pay the outstanding balance in full on receiving each statement of account, the lender shall also disclose in the initial disclosure statement the information prescribed by the regulations.

21A (1) In a variable rate fixed loan where the interest rate is linked to a public index rate as indicated in the credit agreement, specific notification to the borrower of a change in the interest rate is not necessary, but, a disclosure statement shall be provided to the consumer at least once every twelve months containing the items prescribed by the regulations.

(2) Where the interest rate in a variable rate fixed loan may be changed but the rate is not fixed to a public index, a lender shall provide a subsequent disclosure to the borrower as prescribed by the regulations within thirty days after increasing the annual interest rate to a rate that is one or more per cent higher than the most recently disclosed rate.

(3) Where, due to default charges or missed payments under a fixed credit agreement, the amount of the borrower's scheduled payments does not pay the accrued interest, the lender shall provide the borrower with written notification of this fact within thirty days.

21B (1) Where a lender and borrower agree to amend an existing loan agreement, the lender shall advise the borrower, in writing, within thirty days of any information that has changed as a result of the amendment.

(2) Where a lender offers to waive one or more payments without waiving corresponding interest charges, the lender shall state prominently in its offer that the interest will accrue.

(3) Where a schedule of payments is changed by an amendment, the lender shall give notice of the new schedule of payments and any increase in total payments or cost of borrowing within thirty days.

(4) Subject to subsection (5), lenders who issue credit cards shall give thirty days advance notice of any material changes to the information contained in the initial disclosure.

(5) Subsection (4) does not apply to

(a) changes in the credit limit;

(b) increases in a grace period; or

(c) decreases in charges payable by the consumer.

(6) Changes in information, including the changes referred to in subsection (5), shall be disclosed to the borrower in the next periodic statement.

21C (1) No broker shall require or accept any payment or any security for any payment, directly or indirectly, for whatever reason, from or on behalf of a borrower in respect of a loan of money until the borrower has actually received the loan.

(2) Every arrangement by which a broker takes payment, consideration or a security in contravention of subsection (1) is void.

(3) A broker shall provide a borrower with a statement containing the requirements prescribed by the regulations before providing goods or services to the borrower.

21D A borrower is not liable to pay a lender as the cost of borrowing any sum or at a rate that exceeds the sum or rate disclosed in a statement required pursuant to this Act.

21E (1) A borrower is entitled to pay the full outstanding balance of a credit agreement at any time without any prepayment charge or penalty.

(2) A borrower who prepays the full outstanding balance of a credit agreement for fixed credit shall be refunded or credited with a portion of any non-interest charge, excluding disbursement charges, that was paid by the borrower or was added to the outstanding balance of the credit agreement.

(3) The portion of each non-interest charge that shall be credited to the borrower pursuant to subsection (2) shall be determined by a formula prescribed by the regulations.

(4) A borrower is entitled to prepay a portion of the outstanding balance of a credit agreement for fixed credit on any scheduled payment date or at least monthly without any prepayment charge or penalty, but the borrower is not entitled to a credit for any non-interest charges.

21F (1) The only default charges that may be provided for by a credit agreement are

(a) reasonable charges in respect of legal costs incurred in collecting or attempting to collect a payment on a credit agreement;

(b) reasonable charges in respect of costs, including legal costs, incurred in realizing a security interest or protecting the subject-matter of a security interest after default; and

(c) reasonable charges that reflect costs incurred by the lender because a cheque or other payment instrument given by the borrower to the lender was dishonoured.

(2) For the purpose of this Section, reasonable charges are those that are cost recovery and do not generate revenue over and above the actual cost.

21G (1) This Section applies to advertisements that offer fixed credit and state the interest rate or amount of any payment.

(2) Advertisements for fixed credit shall disclose those items prescribed by the regulations.

21H Advertisements for open credit shall disclose those items prescribed by the regulations.

21I Advertisements for interest-free loans shall disclose those items prescribed by the regulations.

21J (1) In addition to the disclosure requirements for open credit, a lender who issues a credit card shall disclose in the initial disclosure statement for open credit associated with a credit card the card holder's maximum liability for unauthorized use of the credit card if it is lost or stolen.

(2) The maximum liability of a card holder arising from unauthorized use of a lost or stolen credit card before the issuer receives notice is the lesser of

(a) fifty dollars; and

(b) the amount fixed or agreed to by the card issuer as the maximum amount for which the card holder is liable in the event of the unauthorized use of the credit card after its loss or theft.

(3) A card holder is not liable for a debt incurred through the unauthorized use of a lost or stolen credit card after the card issuer receives notice of the loss or theft.

(4) A notice to the card issuer pursuant to this Section may be oral or in writing.

(5) The maximum liability referred to in this Section does not apply to a transaction at an automatic teller machine that can be effected only by using a personal identification number that the card holder has agreed to keep secret.

(6) Subject to subsection (7), the responsibility for credit card indebtedness rests with the borrower and not with persons who have obtained additional credit cards for the borrower's account at the request of the borrower.

(7) A written agreement signed by the additional card holders referred to in subsection (6) may assign responsibility for credit card indebtedness to the additional card holders.

21K (1) A borrower may cancel an optional service of a continuing nature provided by the credit grantor by giving one month's notice or such shorter period of notice as provided for by the terms of the agreement under which the service is provided.

(2) A borrower who cancels an optional service is not liable for and is entitled to a refund of any amount already paid for charges relating to any portion of the service that has not been provided at the time of cancellation.

(3) The refund referred to in subsection (2) shall be calculated using the formula prescribed by the regulations for determining refund upon prepayment.

21L (1) Subject to subsection (2), in a retailer consumer transaction late fees applied to overdue accounts are not considered an extension of credit and are not subject to the disclosure requirements of this Act.

(2) A retailer shall disclose at the time of billing the terms of payment, the late payment penalty expressed as an annual and monthly percentage and the point in time when the penalty takes effect.

21M In Sections 21N to 21U,

(a) "assumed residual payment" means

(i) for a lease that is neither an option lease nor a residual obligation lease, the estimated residual value,

(ii) for an option lease, the lesser of the estimated residual value and the option price, assuming the option is exercised at the end of the lease term, or

(iii) for a residual obligation lease, the estimated residual cash payment plus the estimated residual value;

(b) "capitalized amount" means the lease value of the leased goods plus the amount of any advances made to the lessee before the beginning of the term of the lease less the amounts of any payments made by the lessee before the beginning of the term of the lease, excluding any payments made by the lessee to the lessor and expressly held by the lessor as security for any or all of the obligations of the lessee to the lessor and any periodic lease payments that are paid at or before the beginning of the term;

(c) "estimated residual cash payment" means an amount that the lessee is required to pay to the lessor at the end of the term of a residual obligation lease if the realizable value of the leased goods at the end of the term equals their estimated residual value;

(d) "estimated residual value" means the lessor's reasonable estimate of the wholesale value of the leased goods at the end of the leased term;

(e) "implicit finance charge" for a lease means the total of the periodic payments plus the assumed residual payment less the capitalized amount;

(f) "lease" means an agreement for the hire of goods, except an agreement for the hire of goods in connection with a residential tenancy agreement or goods leased for commercial purposes;

(g) "lease value" of leased goods means

(i) for a lease by a lessor who in the ordinary course of business sells the product to cash customers, the price for which the lessor sells the product to cash customers, unless the parties have agreed to a lower price,

(ii) for a lease by a lessor to whom subclause (i) does not apply, a reasonable estimate of the cash value, or

(iii) for an advertisement, the price for which the advertiser currently offers to sell the product to cash customers or, where the advertiser does not currently offer the product to cash customers, the price stated in the advertisement;

(h) "lessee" means an individual to whom a lease is given;

(i) "lessor" means a person who grants a lease;

(j) "option lease" means a lease that gives the lessee the right to acquire title to or retain permanent possession of the leased goods by making a payment in addition to the payments required under the lease or by satisfying other specified conditions;

(k) "option price" means the amount of the additional payment that the lessee must make in order to exercise the option under an option lease;

(l) "period" means a period, such as a month, into which the term of the lease is divided for the purpose of determining the timing and amount of payments under the lease;

(m) "residual obligation lease" means a lease under which the lessee may be required at the end of the lease term to pay the lessor an amount based wholly or partly on the difference, if any, between the estimated residual value and the realizable value of the leased goods;

(n) "term of the lease" means the time during which the lessee is entitled to retain possession of the leased goods;

(o) "total lease cost" means the total of the payments that are unconditionally required to be made by the lessee, excluding any payments made by the lessee to the lessor and expressly held by the lessor as security for any or all of the obligations of the lessee to the lessor.

21N Sections 21O to 21U apply to a lease only if the lease

(a) is for a fixed term of four months or more;

(b) is for an indefinite term or is renewed automatically until one of the parties takes positive steps to terminate it; or

(c) is a residual obligation lease.

21O (1) The disclosure statement shall disclose the information prescribed by the regulations that applies to the lease.

(2) The lessor shall deliver the initial disclosure statement to the lessee before the lessee enters into the lease or makes a payment.

21P The annual percentage rate for the lease shall be calculated based on the formula set out in the regulations.

21Q (1) A written advertisement that gives any specific information about the cost of a lease shall disclose the requirements prescribed by the regulations.

(2) All required disclosures shall be conspicuous with the annual percentage rate for the lease as prominent as the most prominently disclosed element of the cost of leasing and leases that use an example to disclose the annual percentage rate shall base the disclosure on a sample representative transaction.

(3) An advertisement broadcast on radio, television, billboard, busboard or other media with similar space and time limitations that gives any specific information about the cost of a lease shall disclose the requirements prescribed by the regulations.

21R (1) Where a lease gives the lessee the right to exercise a purchase option on payment of an option price, whether at lease-end or at any time during the lease, the lease shall disclose the option price or the method by which the price will be determined.

(2) The lease shall disclose either the financial terms or the method used to determine any financial terms applicable to early termination of the lease.

(3) The amount of compensation for early termination may be limited by the regulations.

21S (1) A lessee's maximum liability at the end of the term of a residual obligation lease after returning the leased goods to the lessor shall be calculated in accordance with the following formula:

P + (V - R)

where

(a) "P" is the estimated residual cash payment;

(b) "V" is the estimated residual value; and

(c) "R" is the realizable value as determined by subsections (2) and (3).

(2) Subject to subsection (3), the realizable value of leased goods at the end of the lease term is the greatest of

(a) the price for which the lessor disposes of the goods;

(b) eighty per cent of the estimated residual value; and

(c) the estimated residual value minus three times the average monthly payment.

(3) Where, pursuant to clause (a) of subsection (2), the goods are disposed of for less than the amount determined pursuant to clause (b) or (c) of subsection (2), the realizable value is reduced to the extent that the difference in the amounts is attributable to unreasonable or excessive wear or use or to damage to the goods for which the lessee is responsible under the terms of the lease.

21T (1) The only default charges that may be provided for by a lease agreement are

(a) reasonable charges in respect of legal costs incurred in collecting or attempting to collect a payment on a lease agreement;

(b) reasonable charges in respect of costs, including legal costs, incurred in realizing a security interest or protecting the subject-matter of a security interest after default; and

(c) reasonable charges that reflect costs incurred by the lessor because a cheque or other payment instrument given by the lessee to the lessor was dishonoured.

(2) For the purpose of this Section, reasonable charges are those that are cost recovery and do not generate revenue over and above the actual cost.

21U (1) Where a lessor and lessee agree to amend an existing lease agreement, the lessor shall advise the lessee, in writing, within thirty days of any information that has changed as a result of the amendment from the original disclosure statement.

(2) Where a lessor offers to waive one or more payments without waiving corresponding interest charges, the lessor shall state prominently in its offer that the interest will accrue.

(3) Where the schedule of payments is changed by an amendment, the lessor shall give notice of the new schedule of payments and any increase in total payments or cost of borrowing within thirty days.

6 (1) Subsection 29(1) of Chapter 92 is amended by striking out "two" in the eighth line and substituting "twenty-five".

(2) Subsection 29(2) of Chapter 92 is amended by striking out "twenty-five" in the third line and substituting "one hundred".

7 Section 30 of Chapter 92 is repealed and the following Section substituted:

30 An information for an offence under this Act may be laid at any time within three years from the time when the offence or act was committed.

8 Section 33 of Chapter 92 is repealed and the following Section substituted:

33 (1) The Governor in Council may make regulations

(a) providing for the registration of lenders, brokers or lessors or any class or classes of lenders, brokers or lessors and their agents, officers, servants or employees and for the issue of permits;

(b) prescribing the forms of application for a permit and the information to be supplied by applicants;

(c) prescribing the terms and conditions of a permit or any type or class of permit;

(d) requiring permit holders or any class of permit holder to be bonded in such form and terms and with such collateral security as are prescribed and providing for the forfeiture of security and the disposition of the proceeds;

(e) respecting the suspension or cancellation of a permit;

(f) declaring that this Act does not apply to a buyer or seller or a class or classes of buyers or sellers or to a borrower or lender, broker or lessor or a class or classes of borrowers, lenders, brokers or lessors;

(g) providing for approval of forms of agreements, assignments and other instruments and documents to be used by permit holders;

(h) requiring any class or classes of applicant or permit holder to submit forms of credit agreements, instruments and other documents used by that person to the Registrar for approval;

(i) requiring the use by permit holders of credit agreements, instruments and other documents that are in a form approved by the Registrar and prohibiting the use by any class or classes of applicants or permit holders of such agreements, instruments or documents that are not in a form approved by the Registrar;

(j) prescribing the manner in which the cost of borrowing stated as a percentage shall be calculated and expressed by any class or classes of permit holders which may be different for different classes of permit holders or for different types of businesses carried on by permit holders;

(k) prescribing a code of ethics for permit holders;

(l) regulating forms of advertising by permit holders relating to the extension of credit or a lease;

(m) prescribing the form and content of records relating to credit or lease transactions to be kept by permit holders and the length of time for which the records shall be kept;

(n) prescribing reports and returns to be made by permit holders or any class or classes of permit holders and requiring the reports and returns to be made to the Registrar;

(o) prescribing forms and providing for their use and requiring the information in any form to be verified by affidavit;

(p) prescribing fees for a permit, searches, certificates and other matters or services rendered or supplied by the Registrar;

(q) prescribing fine amounts that can be levied by the Registrar;

(r) defining any word or expression used but not defined in this Act;

(s) deemed necessary or advisable to carry out effectively the intent and purpose of this Act.

(2) The exercise by the Governor in Council of the authority contained in subsection (1) is regulations within the meaning of the Regulations Act.

9 Sections 2 and 3 of Chapter 291 of the Revised Statutes, 1989, the Mortgage Brokers' and Lenders' Registration Act, are repealed and the following Sections substituted:

2 In this Act,

(a) "default charges" means those charges permitted by this Act;

(b) "floating rate" means an interest rate that bears a specified mathematical relationship to a public index rate;

(c) "Minister" means the Minister of Service Nova Scotia and Municipal Relations;

(d) "mortgage" includes any charge on real property or on real and personal property for securing money or money's worth;

(e) "mortgage broker" means

(i) a person or firm that functions for a fee as an intermediary between a borrower and a lender in securing a mortgage from a lender, or

(ii) a person who, by advertisement, notice or sign, indicates that the person is a mortgage broker;

(f) "mortgage lender" means a person who

(i) as a business or in the course of business extends credit secured by real property, and includes the person's agent or assignee, or

(ii) by advertisement, notice or sign, indicates that the person is a mortgage lender;

(g) "person" includes a partnership or sole proprietorship where the sole proprietor uses a business name other than the person's own name or uses the person's own name with the addition of some word or phrase;

(h) "prescribed" means prescribed by this Act or the regulations;

(i) "public index" means a floating rate of interest that is easily ascertainable by the public and is made public at least weekly in a publication of general circulation;

(j) "Registrar" means the Registrar of Mortgage Brokers and Lenders.

3 (1) The Governor in Council may appoint a person to be the Registrar of Mortgage Brokers and Lenders.

(2) The Governor in Council may appoint a Deputy Registrar of Mortgage Brokers and Lenders who, in the absence or incapacity of the Registrar or when the office of Registrar is vacant, shall perform the duties and may exercise all the powers of the Registrar.

(3) In the event that a Registrar is not appointed pursuant to subsection (1), the functions of the Registrar under this Act shall be performed by the Registrar of Credit appointed pursuant to the Consumer Protection Act.

10 Section 5 of Chapter 291, as amended by Chapter 4 of the Acts of 1999, is further amended by

(a) adding "and Lenders" immediately after "Brokers" in the second line; and

(b) repealing clause (a) and substituting the following clause:

(a) the name of every mortgage broker and lender who is granted a permit under this Act;

11 Sections 6 to 9 of Chapter 291 are repealed and the following Sections substituted:

6 Every person who carries on business as a mortgage broker or lender shall obtain a permit from the Registrar.

7 (1) A person who makes a loan of an amount of twenty-five thousand dollars or more for a commercial or industrial purpose shall, with respect to that loan, be exempt from this Act and the regulations.

(2) For the purpose of this Section, a loan for a commercial or industrial purpose includes a loan made on the security of an apartment building or office building.

(3) A joint stock company of which all the outstanding capital stock is beneficially owned directly or indirectly by Her Majesty in right of the Province is exempt from this Act and the regulations.

8 Upon receipt of an application for a permit or the renewal of a permit and upon payment of the prescribed fee, where the Registrar is satisfied that the applicant satisfies all the requirements of this Act and the regulations respecting registration and is suitable to be issued a permit, the Registrar shall grant a permit or renewal to the applicant.

9 Where the Registrar is not satisfied that an applicant satisfies all the requirements of this Act and the regulations respecting registration and is suitable to be issued a permit or where the Registrar is of the opinion that it is not in the public interest to issue a permit to the applicant, the Registrar may refuse to grant or renew the permit.

9A The Registrar shall not issue a permit to any person other than a corporation whose usual place of abode is outside the Province or to any corporation that does not, at the time of the application for registration, maintain a permanent office in the Province.

9B Every permit issued pursuant to this Act expires three years from the date it was issued but may be renewed on application in the prescribed form and upon payment of the prescribed fee.

9C (1) A mortgage lender may set the terms and amount of insurance coverage that shall be obtained by the borrower.

(2) A borrower who is required as a term of the agreement to purchase any insurance may purchase it from any insurer who may lawfully provide that type of insurance.

(3) A mortgage lender who offers to provide or to arrange insurance referred to in subsection (2) shall at the same time clearly disclose to the borrower, in writing, that the borrower may purchase the required insurance from an insurer of the borrower's choice.

9D (1) Where a disclosure to a borrower is required by this Act or the regulations to be made in a disclosure statement, the disclosure statement shall

(a) be in writing or in an electronic format with the borrower offered the choice of receiving disclosure in a hard copy format; and

(b) express the required information clearly, concisely, in logical order and in a manner that is likely to bring the information to the borrower's attention.

(2) A mortgage lender shall provide the initial disclosure statement at least two days before the borrower enters into the agreement or renews the agreement.

(3) Changes in terms favourable to the borrower in that they reduce the cost of borrowing are permitted without prior notice.

(4) The borrower may waive, in writing, the two-day period referred to in subsection (2) if the borrower receives independent legal advice.

9E (1) A disclosure statement for a mortgage shall contain the information prescribed by the regulations.

(2) Subsection (1) applies to mortgage agreements that are renewed, amended or entered into after the coming into force of this Section.

9F (1) In a variable rate mortgage, where the interest rate is linked to a public index rate, specific notification to the borrower of a change in interest rate is not necessary.

(2) Where the interest rate may be changed but is not fixed to a publicly disclosed index, a mortgage lender shall provide a subsequent disclosure to the borrower as prescribed by the regulations within thirty days after increasing the annual interest rate to a rate that is one or more per cent higher than the most recently disclosed rate.

9G A statement containing the information prescribed by the regulations shall be provided annually by the mortgage lender to the borrower.

9H (1) Where a mortgage lender and a borrower agree to amend an existing mortgage agreement, the mortgage lender shall advise the borrower, in writing, within thirty days of any information that has changed as a result of the amendment.

(2) Where a mortgage lender offers to waive one or more payments without waiving corresponding interest charges, the mortgage lender shall state prominently in its offer that the interest will accrue.

9I (1) For the purpose of renewing a mortgage, the mortgage lender shall provide the borrower with a disclosure statement twenty-one days before the effective date of the renewal agreement.

(2) Where a mortgage lender fails to provide the borrower with a renewal statement for a mortgage twenty-one days before the effective date of the renewal agreement, the borrower's rights under the original loan agreement shall continue to apply until twenty-one days after the renewal statement is provided to the borrower.

(3) A renewal statement for a mortgage shall provide the same categories of information as the disclosure statement for the mortgage.

(4) A mortgage lender who does not intend to renew a mortgage shall notify the borrower of its intention at least twenty-one days before the expiry of the term of the mortgage.

9J A mortgage broker shall provide a borrower with a statement containing the information prescribed by the regulations pertaining to brokered loans before providing goods or services to the borrower.

9K (1) The only default charges that may be provided for by a mortgage agreement are reasonable charges

(a) in respect of legal costs incurred in collecting or attempting to collect a payment on a mortgage agreement;

(b) in respect of costs, including legal costs, incurred in realizing a security interest or protecting the subject-matter of a security interest after default; and

(c) that reflect costs incurred by the mortgage lender because a cheque or other payment instrument given by the borrower to the mortgage lender was dishonoured.

(2) For the purpose of this Section, reasonable charges are those that are cost recovery and do not generate revenue over and above the actual cost.

9L (1) A borrower may cancel an optional service of a continuing nature provided by the mortgage lender by giving one month's notice or such shorter period of notice as provided for by the terms of the agreement under which the service is provided.

(2) A borrower who cancels an optional service is not liable for and is entitled to a refund of any amount already paid for charges relating to any portion of the service that has not been provided at the time of cancellation.

(3) The refund referred to in subsection (2) shall be calculated using the formula prescribed by the regulations.

9M Advertisements that offer mortgages and state the interest rate or amount of any payment shall disclose the information prescribed by the regulations.

12 Section 11 of Chapter 291, as amended by Chapter 4 of the Acts of 1999, is further amended by striking out "may" in the fourth line and substituting "shall".

13 Section 15 of Chapter 291 is amended by adding "or lender" immediately after "broker" in the second and in the fourth lines.

14 Section 16 of Chapter 291 is amended by

(a) adding "and lenders" immediately after "brokers" in the third line of clause (a);

(b) adding "and lenders" immediately after "brokers" in the second line of clause (b);

(c) adding "and lenders" immediately after "brokers" in the first and in the third lines of clause (c); and

(d) adding "and lenders" immediately after "brokers" in the third line of clause (d).

15 Section 18 of Chapter 291 is repealed and the following Section substituted:

18 (1) The Governor in Council may make regulations

(a) prescribing the form of application for a permit or for the renewal of a permit;

(b) prescribing fees for a permit;

(c) respecting the suspension or cancellation of a permit;

(d) prescribing the form and content of records to be kept by mortgage brokers and lenders;

(e) requiring mortgage brokers and lenders to make reports and returns to the Registrar;

(f) prescribing the form and content of reports and returns to be made to the Registrar either at stated intervals or upon demand by the Registrar;

(g) requiring mortgage lenders to submit to borrowers statements disclosing particulars of mortgages and prescribing the form and content of those statements;

(h) prescribing different forms of statement for different types of transactions or different classes or mortgage lenders;

(i) prescribing the information to be contained in forms and statements to be provided to borrowers by mortgage lenders;

(j) providing that the completion of any transaction or class of transaction involving a mortgage be postponed until such time as is prescribed by the regulations after the submission to the mortgagor of a statement showing particulars of the mortgage;

(k) exempting persons or classes of persons in whole or in part from any or all of the provisions of this Act or the regulations;

(l) exempting mortgage brokers and lenders from all or any part of this Act or the regulations with respect to specified transactions or classes of transactions;

(m) relating to advertising by mortgage brokers and lenders;

(n) prescribing additional functions and duties of the Registrar and persons appointed to assist in the administration of this Act;

(o) defining any word or expression used but not defined in this Act;

(p) deemed necessary or advisable to carry out effectively the intent and purpose of this Act.

(2) The exercise by the Governor in Council of the authority contained in subsection (1) is regulations within the meaning of the Regulations Act.

16 Section 20 of Chapter 291 is repealed and the following Section substituted:

20 (1) For the purpose of this Act, a person is deemed to be carrying on business as a mortgage lender if in any period of twelve consecutive months the person lends money on the security of five or more mortgages.

(2) A person who lends money on the security of fewer than five mortgages in any period of twelve consecutive months shall provide the information prescribed by the regulations to a borrower.

17 Section 21 of Chapter 291 is amended by adding "or lender" immediately after "broker" in the fourth and in the seventh lines.

18 Chapter 291 is further amended by adding immediately after Section 21 the following Section:

21A Evidence of one transaction is prima facie evidence that a person is carrying on the business of a mortgage broker or lender.

19 Section 22 of Chapter 291 is repealed.

20 Subsection 23(1) of Chapter 291 is repealed and the following subsections substituted:

(1) For the purpose of this Section, prepayment means the prepayment in full or in part of the outstanding indebtedness secured by the mortgage before the completion of the term.

(1A) Every mortgage entered into or renewed on or after June 30, 1985, shall state whether the mortgage may be prepaid in full or in part and, where it can, the mortgage shall state the terms of the prepayment.

21 Section 25 of Chapter 291 is amended by striking out "a mortgage" in the second line and substituting "the charge on real property secured by a mortgage".

22 Sections 26 and 27 of Chapter 291 are repealed and the following Sections substituted:

26 Where a person who holds a permit as a mortgage broker or lender uses, in connection with a business relating to mortgages, a letter, card or other document or paper or publishes an advertisement in any form relating to mortgages, the letter, card, document, paper or advertisement shall show the name and address on the permit.

27 No mortgage broker or lender shall make or cause to be made any representation in writing that the person holds a permit issued pursuant to this Act.

23 Section 28 of Chapter 291, as amended by Chapter 4 of the Acts of 1999, is further amended by adding "as a mortgage broker or lender" immediately after "permit" in the first line.

24 (1) Subsection 29(1) of Chapter 291 is amended by striking out "five" in the fourth line and substituting "twenty-five".

(2) Subsection 29(2) of Chapter 291 is amended by striking out "twenty-five" in the third line and substituting "one hundred".

25 This Act comes into force on such day as the Governor in Council orders and declares by proclamation.