Most cross-border deal problems are predictable. They come from applying home-country habits to the other side of the border. Answer these seven questions before you issue a term sheet, and most surprises disappear.
1. Is the rate legal where the property sits?
In Canada, the criminal rate is 35% APR unless the commercial exemption applies (Article 1). In the US, each state sets its own usury rules, and some carry criminal penalties (Article 2). Price to the governing law, including every fee.
2. Is the borrower a consumer or a business?
Purpose drives licensing, disclosure and sometimes the rate cap. Document business purpose with evidence, not just a signed certificate (Article 3).
3. Does anyone in the chain need a license?
Check the lender, the broker and the administrator in the property's province or state. BC's new Mortgage Services Act takes effect 13 October 2026 (Blog 1).
4. Will the interest be taxed at source?
Arm's-length, non-participating interest is usually free of withholding under the Canada–US treaty. Equity kickers, related-party loans and a local office change the answer (Article 6).
5. Is your KYC file good enough for both countries?
FINTRAC penalties rose sharply in March 2026 (Blog 4). Screen every party against sanctions lists and confirm beneficial owners at the 25% threshold (Article 7).
6. Is your security in the right form and the right registry?
Use the local instrument, the right title protection, and file personal property security where the borrower is located, which for a Canadian company is its home province (Article 10).
7. How will you enforce, and where?
Only local courts can sell local land. Plan the enforcement route, anti-deficiency rules and guarantor locations at origination (Articles 5 and 8).
Put it into practice
- Save this checklist to your deal intake template
- Assign each question to the person who will answer it
- Book local counsel in the property's jurisdiction before the term sheet
Connect. Collaborate. Capitalize. CBPLA members work with lenders, brokers, capital providers and professional advisors on both sides of the border. Learn about membership at www.cbpla.com or write to info@cbpla.com.
This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com