Can a purchaser under an agreement of sale continue to make payments to the vendor after having notice of a subsequent mortgage?

Saskatchewan, Canada


The following excerpt is from Weidman v. McClary Mfg. Co., 1917 CanLII 254 (SK CA):

In Rose v. Watson, 10 H.L. Cas.672 where the question was whether a purchaser under an agreement of sale could continue to make payments to the vendor after having notice of a subsequent mortgage on the same property, Lord Cranworth at p. 684 said: My Lords, the only part of the case which, I confess, did, for a short time, create a doubt in my mind, was with reference to the payments made after the mortgage. But I think that my noble and learned friend has put the question quite upon the proper footing. When a man mortgages his estate, although there may be notice that there is such a mortgage, all persons who are indebted to the mortgagor in any way, in respect to that estate, must go on and deal with all contracts which have been entered into with the mortgagor, just as if no such mortgage had taken place; unless, indeed, the mortgagee having a right to interfere, does interfere, saying, “Pay no longer.” It is upon this principle that tenants are not only at liberty to pay, but are bound to pay their rents to the mortgagor until the mortgagee interferes to stop them. Precisely the same principle must apply to any other contract which exists between the mortgagor and third persons. Until the mortgagee interferes, in consequence of his mortgage, to prevent contracts being carried on between the mortgagor and other persons, those persons must deal with the mortgagor just as if no mortgage had taken place.

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