Alberta Court Rejects Lender Mortgage Fees

An Alberta court has disallowed a mortgage lender’s fee claims, citing misconduct in a residential foreclosure case. The Court of King’s Bench of Alberta ruled on August 5, 2026, that the lender had claimed thousands of dollars in fees it was not entitled to collect from two borrowers.

The case centered on the lender’s bid to confirm the amount owing under its mortgage, a required step before a redemption order can set a deadline for the borrowers to reinstate or pay out their loan. The lender claimed $364,042.25 in its Statement of Secured Indebtedness, but the court disallowed $6,895.81 of that amount.

Disallowed amounts included a $5,364.98 charge tied to a slice of the lender’s 2026 commercial mortgage impairment insurance premium, a $500 default fee, and $750 in late fees. The insurance charge was disallowed because it stemmed from an ongoing corporate policy rather than one specific to the property.

The lender could not show that two underlying invoices – for $20,250 and $3,774 – had actually been paid by the company. The default and late fees failed because Alberta’s Consumer Protection Act and the federal Interest Act bar penalty-style charges on mortgage arrears that exceed compensation for an actual cost.

The court faulted how the lender presented its case, saying its Statement of Secured Indebtedness was materially inaccurate. The lender’s Affidavit of Default lacked the particulars needed to support the disputed charges, including any account ledger showing the loan’s payment history.

The judge wrote that the lender’s conduct “cumulatively constitutes misconduct in these foreclosure proceedings.” The court has ordered the lender to file a supplemental Affidavit of Default, including a two-year account ledger, with the unenforceable charges and any related interest removed.

Related: ID Theft Cases Surge in 2026

Before returning to court for a further hearing on the redemption order, the lender must remove the unenforceable charges. At that hearing, the judge will address costs and potential remedies under the Consumer Protection Act, including statutory damages capped at the lesser of $500 or five percent of the outstanding balance.

For lenders and the professionals who service loan books, the lesson is straightforward: fee practices baked into mortgage renewal agreements only hold up if they’re tied to actual, provable costs. Alberta courts are reading the fine print closely.