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Canadian Agricultural Loans Regulations (SOR/99-122)

Regulations are current to 2024-06-19 and last amended on 2014-02-28. Previous Versions

Canadian Agricultural Loans Regulations




Registration 1999-03-11

Canadian Agricultural Loans Regulations

P.C. 1999-401  1999-03-11

His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, the Minister of Finance and the Treasury Board, pursuant to sections 4, 6, 10, 12 and 15Footnote a of the Farm Improvement and Marketing Cooperatives Loans ActFootnote b, hereby makes the annexed Farm Improvement and Marketing Cooperatives Loans and Fees Regulations, 1998.


  •  (1) The definitions in this subsection apply in these Regulations.


    Act means the Canadian Agricultural Loans Act. (Loi)


    borrower means a farmer or a farm products marketing cooperative. (emprunteur)

    guaranteed farm improvement loan

    guaranteed farm improvement loan[Repealed, SOR/2014-39, s. 2]

  • (2) The definitions in this subsection apply for the purposes of the Act.


    additions includes the installation and construction of foundations for buildings and the purchase of materials for that purpose, and the purchase and installation of equipment for, or systems of plumbing, heating, ventilating, air conditioning, sewage disposal or water supply or parts thereof to an existing structure or as part of an increase to an existing structure. (ajout)


    alteration, with respect to a building, means a structural modification to the exterior or interior of any structure that is designed to improve, modernize or increase the usefulness of a structure and includes

    • (a) the purchase of material for that purpose;

    • (b) the relocation of any equipment; and

    • (c) the modification of any system of plumbing, heating, ventilating, air conditioning, sewage disposal, water supply or electrical system, or any parts thereof. (modification)


    repair includes the painting of any structure and the purchase of the material and services required for a repair. (réparation)

    works for drainage

    works for drainage means works related to the making of a drainage ditch, tiling and drainage installations and pumping and diking installations and includes works for the prevention of soil erosion by water. (travaux de drainage)

  • SOR/2014-39, s. 2

Other Prescribed Purposes for Loans

 For the purpose of paragraph 4(1)(h) of the Act, the other purposes for loans made to farmers are the following:

  • (a) the clearing, breaking, irrigating and reclaiming of land;

  • (b) the conservation of soil and the prevention of soil erosion by the planting of trees and shelter belts;

  • (c) the purchase, movement to and installation on a farm of complete or partially complete structures and, if necessary, the completion of the installed structures;

  • (d) if the cost is $2,000 or more, a repair or overhaul of fencing;

  • (e) if the cost is $2,000 or more, the purchase and planting of trees for syrup production and the purchase and planting of fruit trees, Christmas trees and ginseng;

  • (f) the construction of a road or driveway on a farm;

  • (g) the costs of land transfer taxes and survey, appraisal and legal costs relating to the purchase of additional land;

  • (h) the purchase of a crop storage condominium;

  • (i) the cost of obtaining security on existing assets; and

  • (j) the cost of a fee or charge referred to in section 17.

  • SOR/2014-39, s. 3

Other Prescribed Animals

 For the purpose of subparagraph 4(1)(c)(iv) of the Act, other prescribed animals are game birds, ostrich, emu and rhea.

  • SOR/2014-39, s. 4

Consolidation and Refinancing

 The consolidation and refinancing of debts incurred for any of the purposes set out in paragraphs 4(1)(a) to (h) and 6(1)(a) to (d) of the Act are purposes for which the lender may be indemnified.

  • SOR/2014-39, s. 5

Nature of Interest of the Borrower in Farming Operation

 For the purposes of paragraphs 4(3)(b) and 6(2)(b) of the Act,

  • (a) in the case of a loan in respect of property that does not form part of or is not affixed to real or immovable property, the borrower shall own the property outright or hold rights under a conditional sales contract or term contract; and

  • (b) in the case of a loan in respect of property that forms part of or is affixed to real or immovable property, the borrower shall

    • (i) own the real or immovable property,

    • (ii) lease the real or immovable property pursuant to the Prairie Farm Rehabilitation Act or the Veterans’ Land Act, R.S.C. 1970, c. V-4, or

    • (iii) hold a lease in real or immovable property with the lease term extending at least two years beyond the term of the loan.

  • SOR/2014-39, s. 6

Conditions of Loans

 [Repealed, SOR/2014-39, s. 7]

 Every lender shall, at the time of making a loan, require the borrower to give the lender, in addition to any other security referred to in section 15, a written promise to repay the loan signed by the borrower, as a separate document or as an integral part of the lender’s loan document that sets forth the principal amount of the loan, the rate of interest payable on the loan and the repayment terms.

 No initial loan disbursement may be made for a purchase made more than 60 days before the making of the disbursement.

 Repayment of a loan, other than repayment that is scheduled to be made more frequently by agreement between the borrower and the lender, shall be made in instalments that are payable annually.

 Full or partial prepayment of a loan shall be made in accordance with the Bank Act.

 If a loan has a remaining term of fewer than the number of years permitted under paragraph 4(3)(d) or 6(2)(d) of the Act for that type of loan, the lender may renew the loan for additional terms at the rate of interest at the time of renewal if the combined terms do not exceed the maximum term allowed under the Act in respect of that type of loan.

 In the event of actual or impending default in the repayment of a loan, the lender may, with the approval of the Minister and the borrower, alter or revise any of the terms of the loan, or any agreement in connection with the loan, and that alteration or revision shall not discharge the liability of the Minister in respect of the loan under the Act.

  • SOR/2014-39, s. 8

 No security shall be released or substituted by a lender before a loan is paid in full unless authority to do so is obtained in writing from the Minister.

  • SOR/2014-39, s. 9(F)

Rate of Interest

  •  (1) The maximum rate of interest payable per annum by a borrower in respect of a loan is

    • (a) if the rate of interest on the loan is not fixed, the prime lending rate of the lender plus 1%, as that prime rate is fixed daily during the term of the loan; and

    • (b) if the rate of interest is fixed, the residential mortgage loan rate of the lender for a comparable term plus 1%, as that rate is fixed on the date the funds are disbursed or on an earlier date agreed to in writing by the lender and the borrower.

  • (2) If a loan with a fixed rate of interest is to be extended before the expiry of its term, the interest rate on the loan may be blended, merged or combined with the interest rate fixed on the day of extension for the balance of the proposed term in accordance with the lender’s current practice for that type of loan.


 A lender shall take security for the repayment of a loan in one or more of the following forms, as appropriate:

  • (a) security under section 427 of the Bank Act;

  • (b) security registered in accordance with the applicable personal or movable property legislation in the province;

  • (c) a pledge, hypothecation or movable hypothec;

  • (d) a mortgage or hypothec on real or immovable property; or

  • (e) an assignment of any rights or interest of the borrower under an agreement for sale.

  • SOR/2014-39, s. 10

Registration of Loans

  •  (1) A lender shall register every loan with the Minister, in a form approved by the Minister,

    • (a) in the case of a loan made for any purpose set out in any of paragraphs 4(1)(a) to (c), (g) and (h) and 6(1)(a), (d) and (e) of the Act, within 365 days after the date on which the first disbursement is advanced; and

    • (b) in the case of loans made for any purpose set out in paragraph 4(1)(d), (e) or (f) or 6(1)(b) or (c) of the Act, within 365 days after the date on which the first disbursement is advanced.

  • (2) The Minister shall extend the time within which a lender may register the loan on the written application of the lender if the application is received before the expiration of the time set out in paragraph (1)(a) or (b), as the case may be, and the borrower is not in default.

  • SOR/2014-39, s. 11

Fees and Charges

  •  (1) A lender shall pay to the Minister at the time of registration of a loan a fee in the amount of 0.85% of the amount of every loan.

  • (2) For the purposes of subparagraphs 4(3)(e)(i) and 6(2)(e)(i) of the Act, the charge is the administration charge in respect of a loan charged by the lender up to a maximum amount of

    • (a) the lesser of 0.25% of the loan principal or $250, if the loan is for less than $250,000; and

    • (b) 0.1% of the loan principal, if the loan is for $250,000 or more.

  • SOR/2014-39, s. 12

 [Repealed, SOR/2014-39, s. 13]

Procedure on Default

  •  (1) In this section, the default date is the day after the day on which a payment under a loan was scheduled to have been made but was not made.

  • (2) If a borrower is in default in respect of a payment on a loan made for a purpose set out in subsection 4(1) or 6(1) of the Act, the lender shall register, for a period of 10 years, the security referred to in section 15 that the lender holds with respect to the loan and take any of the following measures that will minimize the loss sustained by the lender in respect of the loan or that will maximize the amount recovered:

    • (a) collect the principal and interest outstanding on the loan;

    • (b) fully realize any security, guarantee or suretyship;

    • (c) realize on any insurance policy under which the lender is the beneficiary;

    • (d) fully implement a compromise settlement with the borrower or with a guarantor or surety or any other person on behalf of the borrower, guarantor or surety that has been approved by the Minister; and

    • (e) take legal proceedings, including the enforcement of any resulting judgment, if the estimated cost of the proceedings is not greater than the estimated amount that may be recovered.

  • (3) Unless a claim for loss has been submitted in accordance with section 20, the lender shall submit a Report on Defaulted Loan to the Minister

    • (a) for the purposes set out in subsection 4(1) of the Act, within six months after the default date; and

    • (b) for the purposes set out in subsection 6(1) of the Act, within 15 days after the default date.

  • SOR/2014-39, s. 14

Procedure for Claims

  •  (1) A lender shall take all of the measures described in subsection 19(2) that are applicable before submitting to the Minister a claim for loss sustained as a result of a loan.

  • (2) A claim for loss shall be submitted within 18 months of the default date or, if an extension has been granted by the Minister, then within that extended time period.

  • (3) The Minister shall, on the written request of the lender, extend the period of 18 months so that a lender can continue to carry out the collection measures prior to submitting its claim for loss, if the request is received within 18 months of the default date.

  • (4) A claim for any loss shall be submitted to the Minister in the form approved by the Minister, together with a copy of the borrower’s application form and proof of registration of the security referred to in section 15, if applicable.

  • (5) The lender shall provide the Minister with any other documentation that the Minister may require to justify payment to the lender.

  • (6) The payment is to be made within 60 days after the Minister approves the claim for loss.

  • SOR/2014-39, s. 15

Determination of Loss

 The amount of loss sustained by a lender as a result of a loan that the Minister is liable to repay the lender is 95% of the total of

  • (a) the unpaid principal of the loan,

  • (b) the accrued interest that was not paid by the borrower before the due date of the first unpaid instalment,

  • (c) the uncollected interest accrued after the date referred to in paragraph (b) and outstanding at the time the claim is approved for payment by the Minister, at the rate of interest specified in the written promise to repay the loan, for a maximum period of 365 days after that date;

  • (d) the amount of the legal fees, costs and disbursements that have been assessed and allowed under section 13 of the Act and actually incurred by the lender, with or without litigation, in collecting or endeavouring to collect the loan or in protecting the interests of the Minister, less any costs recovered by the lender; and

  • (e) the amount of any other costs or disbursements actually incurred by the lender in collecting or endeavouring to collect the loan or in protecting the interests of the Minister.

 [Repealed, SOR/2014-39, s. 16]

 [Repealed, SOR/2014-39, s. 16]



Coming into Force

Footnote * These Regulations come into force on 60 days after the day that these Regulations are published in the Canada Gazette.


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